Silver prices sharply declined on Friday, dropping to $29.55, a decrease of over 7%. This downturn follows President Trump’s tariff decisions and China’s retaliatory measures, raising concerns about a global economic slowdown.
The price fell below both the 100- and 200-day Simple Moving Averages, indicating a strong sell-off. If XAG/USD drops below $29.00, it could reach the December 19 swing low of $28.74, with subsequent support at the September 3 low of $27.71.
Conversely, if XAG/USD surpasses $30.00, it may challenge the 200-day SMA at $30.86 and the $31 mark.
Factors influencing Silver prices include geopolitical instability, economic recessions, and the performance of the US Dollar. A strong dollar tends to suppress Silver prices, whereas a weaker dollar often causes prices to rise.
Silver is extensively utilised in industries such as electronics and solar energy, which can affect its market value based on demand. Economic dynamics in the US, China, and India also play a vital role, particularly with industrial use in the US and China, and consumer demand in India for jewellery.
Silver usually follows the trends set by Gold prices, due to their shared status as safe-haven assets. The Gold/Silver ratio helps to evaluate their relative valuations, with high ratios potentially indicating undervaluation of Silver or overvaluation of Gold.
With the metal slipping more than 7% in a single session and breaking below both the 100- and 200-day Simple Moving Averages, what we’ve witnessed is more than just a short-term dip — it’s a marked shift in momentum that brings technical pressure onto bulls. These levels often serve as reference points for trend direction, and falling beneath them tends to attract further selling interest from momentum-based strategies and risk-conscious participants.
What makes this spill particularly sharp is the backdrop of heightened political risk surrounding trade, combined with potential moderation in global factory activity. The trade measures announced by the US and the counteraction taken by Beijing give market participants little reason to bet on any near-term improvement in cross-border demand. Physical buyers in Asia may step in at lower levels, but until signs emerge that macroeconomic conditions are stabilising — or, better yet, improving — the rallies could remain vulnerable to quick reversals.
A break under the $29.00 threshold doesn’t just bring the December low into view; it also risks creating a cascade of sell orders from traders positioned with tight stops. These areas aren’t chosen at random — they often align with previous demand zones, and once breached, they may no longer offer the same cushion. $28.74 and $27.71 become natural pressure points, and we should be watching closely for price reactions there. If those levels begin to act as resistance rather than support, the broader setup could turn even more bearish.
However, should the price turn higher and break above $30.00 — particularly on meaningful volume or following a weaker-than-expected US Dollar print — there might be room to target $30.86. That would be the 200-day SMA, a level that some long-term participants treat as a reference for price equilibrium. Additionally, the $31 handle would likely attract renewed selling, suggesting that any advance could encounter friction.
Outcomes in the US economic calendar, especially related to employment or manufacturing activity, could tilt sentiment in either direction. A robust report might lift the Dollar further, keeping XAG/USD pinned near the lower end of its range. A disappointing print, however, could provide some relief by dampening real yield expectations, which tends to help precious metals gain traction. We should be especially mindful of Federal Reserve commentary — any remark indicating concern about slowing growth would likely support metals across the board, but would particularly benefit Silver given its industrial role.
Speaking of which, industrial consumption from China, especially in sectors like electronics manufacturing and renewable energy, may have taken a hit recently. Depending on how quickly those sectors recover — or not — Silver’s fundamental demand picture may shift in kind. We often underestimate just how responsive these industrial inputs are to factory output levels. India’s demand picture counts as well, especially going into seasonal buying periods. However, that demand is primarily retail-driven and tends to come into play with a lag, rather than shift short-term flows.
One angle we’ve been keeping an eye on is the Gold/Silver ratio, which now sits at an elevated level relative to recent history. A prolonged stay above this range normally suggests that Silver may be underpriced when compared to its counterpart. In the past, mean reversion trades built around this concept have attracted capital precisely when volatility increased and direction was less clear. But for that to occur here, traders would need to see stability first, and that hasn’t shown up yet.
Taken together, the technical and macro backdrop calls for careful attention to price levels in the very near term. Baseline volatility is high, and liquidity can dry up quickly when price breaks through key zones — which increases risk on both sides. Timing entries and exits more precisely matters now more than usual, especially if using leverage or holding options. Let’s keep risk parameters aligned with market velocity rather than assumptions of where the support ought to be.
