Silver (XAG/USD) rose for a sixth straight day on Wednesday, up over 1.30%. It traded at $87.67 per troy ounce, with US inflation raising the chance of higher interest rates for longer.
The technical view is neutral to upward, with price testing $89.50 for the first time since mid-March. It peaked near $89.38 before slipping back under $88.00.
The Relative Strength Index (RSI) is nearing overbought levels, pointing to firmer upside momentum. A break above $89.50 would bring $90.00 into view, then the March 2 high of $96.62 and $100.00.
A drop below $83.06 would turn the near-term set-up neutral. Below that, levels to watch are the 100-day SMA at $81.11, the 20-day SMA at $77.76, the 50-day SMA at $77.09, and then $70.00.
Silver prices are shaped by interest rates, the US Dollar, demand, mining supply, and recycling. They can also react to geopolitical risks, recession fears, industrial use in electronics and solar, and movements in gold, including changes in the Gold/Silver ratio.
Looking back at the analysis from this time last year, we can see the immense optimism when silver was rallying toward $90. That momentum eventually faded as the Federal Reserve maintained its hawkish stance throughout 2025. Now, with silver trading near $75, the setup is quite different, and those lofty targets from last year seem distant.
The economic landscape has shifted significantly since then, creating a more favorable backdrop for precious metals. Recent US CPI data for April 2026 came in at 2.8%, beating expectations and reinforcing the view that inflation is finally under control. This has led the Fed to signal potential rate cuts in the third quarter, a direct reversal of the “higher-for-longer” narrative that previously capped silver’s gains.
Industrial demand, a key price driver, remains robust and is even accelerating. Global data shows a 15% year-over-year increase in solar panel installations for the first quarter of 2026, which are heavily reliant on silver. This provides a strong fundamental floor for the price, something that was more of a secondary consideration during last year’s speculative rally.
We are also observing the Gold/Silver ratio, which currently stands at a historically high 85:1, up from an average of 70:1 in early 2025. This suggests silver is significantly undervalued relative to gold and may have more room to run if precious metals begin a new uptrend. This wide ratio often precedes a period of outperformance for silver.
Given these conditions, derivative traders should consider positioning for a gradual move higher, rather than the explosive breakout eyed last year. Buying call options with strike prices around $80 and $85, expiring in three to six months, offers a defined-risk way to capture potential upside. The $70 level mentioned in the old analysis remains a critical support zone to watch.
