Silver price forecast: XAG/USD plunges 10% from record high as traders lock profits
Silver price plunged over 10% during the Asian session on Monday, falling from an all-time high of $84 to an intraday low near $75. The sharp drop erased nearly all of Friday’s gains, where silver posted its biggest one-day rally of the year, rising more than 10%. That rally had capped off a stellar week for the white metal, which climbed over 17.8% in the final full week of December and marked its fifth consecutive weekly advance.
Highlights
- Silver plunged 10% after hitting an all-time high as traders booked profits rapidly
- RSI at 87 signals a stretched market as silver cools off explosive December rally
- Fed rate cuts and geopolitical tensions may support silver into early 2026
The pullback was triggered by extreme overbought conditions. Silver’s daily Relative Strength Index hit 87 on Friday, its highest reading in several years. Such a high RSI reading often signals that prices have run too far ahead of fundamentals, prompting traders to lock in profits before year's end. The early session selloff on Monday reflects this sentiment, especially after a monthly gain of over 30% and a yearly gain exceeding 160%.
Silver price dynamics (Dec 2025). Source: Tradingview
As of the European session, silver is still trading around $75. Although this is significantly below the $84 peak, it still reflects a robust uptrend when viewed from a broader time frame. At the current price, silver’s 2025 performance is now double that of gold, underscoring strong investor demand for the industrial and monetary metal.
Market outlook stays bullish into 2026 if macro backdrop offsets technical correction
Technical levels now come into sharper focus. The 20 EMA on the 4-hour chart offers near-term support at $73.5. If selling pressure intensifies and that level breaks, the 50 EMA near the psychologically significant $70 level could serve as the next defensive zone. A break below this would suggest deeper unwinding of the overbought condition.
Despite the sharp intraday correction, the broader outlook for silver may stay positive into early 2026. The Federal Reserve has already delivered three rate cuts in 2025, and market pricing proposes two more could come in the new year. Softer interest rates tend to reduce the opportunity cost of holding precious metals, which do not offer yield, making silver more attractive.
In addition, persistent geopolitical tensions continue to support safe-haven demand. These macro drivers could limit the extent of further profit-taking, even as short-term technicals suggest that the market needed to cool off after such an explosive December rally.
In recent analysis, we discussed how silver consolidated near $72 after rallying to a record high. DXY weakness and Fed expectations sustained bids despite overbought RSI readings.
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