Silver price (XAG/USD) traded in a tight range around $72.80 during the European trading session on Friday, maintaining Thursday’s recovery that was driven by weakness in the US Dollar [1]. Despite this brief rebound, the broader trend remains negative, with silver poised for its third straight weekly close in the red [1]. The ongoing pressure on silver prices is attributed to heightened global inflation expectations, which have been exacerbated by surging oil prices following the closure of the Strait of Hormuz by Iran. This strategic waterway, through which 20% of global oil is shipped, was closed as part of Iran's retaliation against a joint assault involving the US and Iran, further escalating tensions in the Middle East [1].
Additional attacks from Iran and Israel on energy facilities in the region have intensified supply concerns, contributing to higher energy prices and fueling inflation fears [1]. Global central banks have responded by warning of energy-linked upside inflation risks and signaling reluctance to reduce interest rates in the near term. This stance diminishes the appeal of non-yielding assets like silver, as higher rates make alternative investments more attractive [1]. Federal Reserve Chair Jerome Powell commented, "Higher energy prices will push up inflation in the near term, but the effects remain uncertain," highlighting the cautious outlook among policymakers [1].
From a technical perspective, XAG/USD remains bearish, trading below the 20-day Exponential Moving Average (EMA) at $81.22, which now acts as dynamic resistance. The sequence of lower closes from the mid-$90s to the low-$70s underscores persistent selling pressure, with the Relative Strength Index (RSI) slipping below 40.00 for the first time in 11 months, confirming downside momentum [1]. Immediate resistance is seen at $76.50, followed by a stronger barrier at $81.00, while initial support is located at $70.00 and Thursday's low of $65.51 [1]. Unless silver recovers and stabilizes above the broken average, sellers remain in control [1].
CONCLUSION
Silver is set for its third consecutive weekly decline, pressured by geopolitical tensions and rising inflation expectations. Central banks' cautious stance on rate cuts and technical bearish signals suggest continued downside risk for XAG/USD. Market participants should monitor developments in the Middle East and central bank policy for further direction.