Central Banks Signal Policy Caution
Statements from the Bank of Japan, Bank of England, and European Central Bank pointed to reluctance to loosen policy while inflation expectations risk de-anchoring amid higher oil prices. Tighter or prolonged restrictive policy is generally a headwind for non-yielding assets such as silver. Geopolitical tensions in the Middle East, involving the US, Israel, and Iran, were associated with support for safe-haven assets. Silver was described as having limited downside under such conditions. On charts, price remained below the 20-day EMA near $81.30, with bearish bias and RSI below 40.00 for the first time in 11 months. Resistance sits at $76.50, then $81.00 and $84.00, while support is near $70 and Thursday’s low of $65.51. Looking back to this time in 2025, we saw silver struggling around the $74 mark with a grim outlook. The primary concern then was the Federal Reserve’s firm stance against interest rate cuts, which kept a lid on non-yielding assets. This created persistent selling pressure that kept the metal below key moving averages. The situation today is markedly different, with silver trading above $85 an ounce. The US Dollar Index (DXY), which hovered near 99.00 in early 2025, has since declined to around 95.50 following the widely anticipated Fed rate cuts that began in the fourth quarter of last year. This dollar weakness has provided a significant tailwind for the white metal.Industrial Demand Drives Silver Higher
A major factor supporting this rally is the acceleration in industrial demand, particularly from the green energy sector. Global solar panel installations, a key consumer of silver, grew by nearly 40% in 2025, reaching a record 550 gigawatts, and forecasts for 2026 show this trend continuing. This robust industrial consumption provides a strong fundamental floor for prices that was less certain last year. While geopolitical tensions in the Middle East provided some safe-haven support in 2025, persistent conflicts have now made this a structural part of the market’s risk premium. This ongoing instability continues to attract investors to tangible assets like silver. This contrasts with last year when the primary driver was short-term flight-to-safety trades. The technical picture from 2025, which showed price trapped below its 20-day exponential moving average near $81, has now completely inverted. That same moving average now serves as a dynamic support level, with the Relative Strength Index holding firmly above 60, signaling strong buying momentum. The bearish sentiment of last year has clearly been washed out. For derivative traders, this environment suggests selling out-of-the-money puts to take advantage of higher implied volatility and the strong technical support. This strategy allows for collecting premium while defining risk, banking on the idea that the price will remain above key support levels like $81. It is a direct reversal of the bearish outlook we held in 2025. Alternatively, for those expecting the rally to extend toward the psychological $90 level, call debit spreads offer a cost-effective bullish position. This defined-risk strategy allows participation in further upside while capping the initial expense. It is a prudent way to play the ongoing bullish trend without the unlimited risk of buying futures contracts. Create your live VT Markets account and start trading now.
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