Silver (XAG/USD) pulled back after failing to clear resistance near $79.00 and was trading around $77.51, keeping to the mid-$77.00s in subdued Monday dealing. The US Dollar was softer as markets weighed prospects of a US-Iran agreement, helping precious metals hold a firmer tone, while volumes were thin during a long weekend in both the US and UK for the Memorial Day bank holiday.
On charts, XAG/USD is forming an inverted Head & Shoulders with resistance framed by the May 19 high near $78.90 and the 38.2% Fibonacci retracement around $79.20. The RSI is in the mid-50s and the MACD remains in positive territory, with the next levels above seen at $80.00 and then $83.00, which also aligns with the 61.8% Fibonacci retracement. Support is located around the May 21 highs near $77.00, followed by Friday’s low around $75.00, and the May 19 low near $73.10.
Fundamental Drivers And Geopolitical Tailwinds
We are seeing silver hold firm around the $31.50 mark, largely supported by a weakening US Dollar. Market consensus is now pricing in at least two Federal Reserve rate cuts before the end of the year, which is keeping pressure off precious metals. This environment suggests that any dips in the coming weeks will likely be viewed as buying opportunities.
Geopolitical factors are also providing a tailwind, particularly the ongoing US-China trade disputes over green technology components. Any escalation in these tensions could fuel a flight to safety, benefiting silver as a haven asset. We believe this dynamic places a solid floor under the current price, making short positions risky.
We cannot overlook the powerful industrial demand story for silver, which sets it apart from gold. The Silver Institute recently confirmed that global industrial offtake is set to hit a record 1.3 billion ounces in 2026, driven heavily by a 20% year-over-year expansion in solar panel manufacturing. This fundamental demand provides a strong argument against any significant, sustained sell-off.
Technical Outlook And Relative Value
From a technical standpoint, silver is showing signs of consolidation with a bullish bias, as the Relative Strength Index (RSI) holds above 50 on the daily charts. We are watching the $32.00 level as a key resistance zone; a decisive break above this could open the door to a quick test of the 2025 highs near $33.50. For now, pullbacks toward the $30.50 support level appear to be attractive entry points for building long positions through options or futures.
The Gold/Silver ratio, currently hovering around 80:1, also suggests that silver is undervalued relative to its more expensive counterpart. Historically, this ratio has averaged closer to 65:1, indicating significant room for silver to outperform gold in the medium term. We view this as a compelling reason to favour silver-based derivatives for traders looking for relative value in the precious metals space.
