Silver Price Forecast: XAG/USD rises above $70 despite Iran war escalates
- Silver price rises to near $70.50 despite fresh escalation in Iran conflicts.
- Middle East war intensifies after Iran-backed Houthis attack Israel's military sites.
- The odds of the Fed delivering at least one interest rate hike this year are 24.6%.
Silver price (XAG/USD) trades almost 1% higher to near $70.50 during the early European trading session on Monday. The white metal gains even as the conflicts in the Middle East, which involve the United States (US), Israel, and Iran, have escalated, following the involvement of Iran-backed Houthis in the war.
Over the weekend, the group said in a statement that it had targeted "sensitive Israeli military sites" and vowed to continue such attacks, BBC reported.
The entry of Yemen-based Houthis for the first time in the ongoing war has prompted fears of widening Middle East conflicts, a scenario that could accelerate fears of persistently higher oil prices, which, in turn, would further induce global inflation expectations.
Theoretically, rising global inflation expectations force central banks to adopt an extended pause or a hawkish stance on interest rates, which diminishes demand for non-yielding assets, such as Silver.
According to the CME FedWatch tool, traders have priced out two interest rate cuts by the Federal Reserve (Fed) for the year, which were expected before the war started, and now see a 24.6% chance of at least one hike.
Technical Analysis
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XAG/USD trades higher at around at $70.50 on Monday. However, the pair remains broadly under near-term bearish pressure as price holds well below the 20-day Exponential Moving Average (EMA), which is descending and now caps the upside near $75.90. The recent sequence of lower highs and lower lows from the $96.60 area reinforces a downside bias, with sellers defending rebounds toward the 20-day EMA.
The 14-day Relative Strength Index (RSI) oscillates inside the 20.00-40.00 zone, confirming persistent negative momentum rather than exhaustion.
Immediate resistance emerges at the $75.90 area where the 20-day EMA aligns with recent swing reactions, followed by the $82.50 region, which coincides with a prior consolidation shelf. A daily close above $82.50 would be needed to challenge the broader downtrend from early-month peaks. On the downside, initial support stands at the recent low near $67.80, and a break below this floor would open the way toward the March 23 low around $61.00. Recovery attempts remain vulnerable while price trades beneath $75.90.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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