Silver (XAG/USD) climbed more than 2% on Thursday, trading around $74.80, as a ceasefire agreement between Israel and Lebanon weighed on the US Dollar and improved market sentiment [1]. Despite this upward move, silver remains confined within a range of $72 to $78, a pattern that has persisted since mid-May [1]. The market is currently awaiting clearer signals from ongoing US-Iran talks, with unresolved issues between Washington and Tehran keeping silver's breakout potential in check [1].
The recent rise in crude oil prices has heightened inflation concerns, fueling expectations that major central banks, including the Federal Reserve, may keep interest rates higher for longer. Higher borrowing costs typically reduce the appeal of non-yielding assets like silver, adding to the metal's near-term bearish bias [1]. Technical analysis shows XAG/USD trading below the 50-day Simple Moving Average (SMA) at approximately $76.20 and well below the 100-day SMA near $80.84, while remaining above the 200-day SMA around $67.65. The Relative Strength Index (RSI) is around 46 and the MACD remains negative, both indicating that momentum still favors the downside [1].
Immediate resistance is identified at the 50-day SMA ($76.20), with a stronger barrier at the 100-day SMA ($80.84). Only a break above this zone would ease the current corrective tone. On the downside, support is seen at $72.00, ahead of the 200-day SMA at $67.65; a break below this level could trigger a deeper retracement [1].
A meaningful breakthrough in US-Iran negotiations could serve as a catalyst for silver, potentially leading to the reopening of the Strait of Hormuz, easing supply concerns, and reducing inflation pressures. This could prompt markets to scale back expectations for higher interest rates, which would be supportive for silver prices. Conversely, renewed tensions or a breakdown in negotiations could boost demand for the US Dollar and drive oil prices higher, increasing the risk of a downside break in XAG/USD [1].
CONCLUSION
Silver has seen a short-term boost from geopolitical developments but remains range-bound as markets await further clarity from US-Iran negotiations and central bank policy. Technical indicators suggest a bearish bias persists unless key resistance levels are breached. The market's next move will likely hinge on diplomatic progress and inflation trends.