Silver Price Forecast: XAG/USD falls below $72.50 on US strikes in Iran, bearish technical signals
- Silver price slumps to near $72.30 in Thursday’s early European session.
- The US military carries out new strikes in Iran, weighing on the Silver price.
- The negative outlook of white metal prevails below the 100-day EMA, with bearish RSI momentum.
- The first upside barrier is located at $77.95; the initial support level to watch is 71.22.
Silver price (XAG/USD) tumbles to around $72.30, the lowest since May 6, during the early European trading hours on Thursday. The precious metal faces some selling pressure amid renewed tensions between the US and Iran.
Reuters on Wednesday reported that the US military carried out new strikes overnight in Iran targeting a military site and shooting down four Iranian one-way attack drones that posed a threat around the Strait of Hormuz. Rising tensions in the Middle East have driven up crude oil prices and strengthened the US Dollar, weighing on the USD-denominated commodity price.
All eyes will be on the release of the US PCE inflation data later in the day. This report might offer some clues about the US interest rate path this year. The headline PCE Price Index is expected to show a rise of 3.8% YoY in April, compared to 3.5% in March. Meanwhile, the core PCE Price Index is projected to show an increase of 3.3% YoY in April, versus 3.2% prior.
The release of the US Personal Consumption Expenditures (PCE) Price Index data for April will be the highlight later on Thursday. If the report shows hotter-than-expected outcomes, this could reinforce the expectation of the interest rate hike from the US Federal Reserve (Fed) this year and undermine the white metal.
Technical Analysis:
In the daily chart, XAG/USD holds well below the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day SMA near, keeping the near-term bias bearish despite the recent bounce off lower levels. The Relative Strength Index (RSI) at 41.76 sits below the neutral 50 line, hinting at lingering downside pressure rather than a decisive recovery.
On the topside, initial resistance emerges at the Bollinger 20-day SMA around $77.95, followed by the May 25 high of $78.83. The next hurdle to watch is the 100-day SMA at $81.30, with the upper Bollinger band near $86.86 acting as a more distant cap if a short-covering rally extends.
On the downside, the next notable cushion is the low of April 30 of 71.22, followed by the 70.00 psychological level. The next contention level is seen at the lower Bollinger band at roughly $69.00, where a break would expose further weakness toward lower, uncharted support zones on the daily scale.
(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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