Silver Price Forecast: Silver Bulls and Bears Battle, Support Seen at $71, Upside at $90

TradingKey - May 22 (ET), Silver ( XAGUSD) retreated during the European session on Friday after two consecutive days of gains, with prices trading near $76.00, primarily weighed down by a hawkish shift in Federal Reserve policy expectations. As a non-yielding asset, silver is highly sensitive to the interest rate environment. When the market expects that the Fed may maintain high interest rates for an extended period, or even reconsider rate hikes amid persistent inflationary pressures, the opportunity cost of holding silver rises, and its investment appeal subsequently declines.

Uncertainty surrounding the US-Iran situation continues to disrupt the silver market.

The latest updates on US-Iran relations indicate that US Secretary of State Marco Rubio stated there are some encouraging signs regarding a potential deal with Iran. Pakistani mediators visited Tehran on May 20, and Iranian officials are reviewing the latest proposal presented by Washington. Substantial progress in US-Iran negotiations would be a short-term positive for silver prices.

However, significant uncertainty still hangs over the negotiation outlook. While senior Iranian officials admitted that differences between the two sides have narrowed, they simultaneously emphasized that a formal agreement with the US has not yet been reached. Crucially, Iran's uranium enrichment activities and Tehran's control over the Strait of Hormuz remain the primary obstacles in the negotiations.

Regarding the Federal Reserve, while the federal funds rate currently remains unchanged, policymakers are gradually downplaying expectations for rate cuts and remain alert to the risk that inflation may fail to cool down. Markets fear that if inflation rebounds due to energy prices or geopolitical risks, the Fed might not only forgo rate cuts but could even signal further policy tightening. Such hawkish expectations are a major factor behind the current retreat in silver prices.

Silver's medium-to-long-term bullish trend remains intact, but the short-term outlook may lean bearish.

Silver price daily chart, Source: TradingView

Looking at the silver daily chart, recent price action has consistently remained above the 144-day moving average, indicating strong support from the long-term moving average. This suggests that the medium-to-long-term bullish trend for silver remains intact, and the outlook remains positive.

The Relative Strength Index (RSI) is hovering around 47, placing it in a neutral-to-weak zone. This indicates that short-term bullish momentum has weakened, and there is a possibility that the short-term trend could turn bearish.

Currently, the 144-day moving average remains a key support level for silver. If this average is breached, silver prices will first test the $71.00 support level; if this level fails to hold, the price may retreat further toward the critical $64.10 support.

On the upside, the primary resistance level to watch is the $90.00 psychological mark. A breakthrough above this level would further open up upside potential toward the $96.40 resistance, with the possibility of testing the $100.00 round number once again.