Silver (XAG/USD) traded lower on Tuesday, falling below $64.50 after being rejected at seven-week highs around $66.60 on Monday [1]. The decline comes amid a more cautious market mood, driven by stalled peace negotiations between the US and Iran, which have diminished hopes for a swift reopening of the Strait of Hormuz and contributed to higher oil prices [1]. Additionally, hawkish comments from Cleveland Federal Reserve President Beth Hammack, who stated that current monetary policy 'is not hurting the economy' and suggested the Fed may need to hike rates more than once to bring inflation back to target, have provided support to the US Dollar and weighed on precious metals [1].
Technical analysis indicates that XAG/USD reached the bullish Head & Shoulders pattern target near $67.00 before correcting to the mid-$64.00s. Momentum indicators such as the RSI (near 60) and MACD (above zero) remain in bullish territory, but bears are expected to test support at the previous resistance area around $63.30. A break below this level could shift focus toward the August 6 and 7 lows near $61.00, and further down to the broken H&S neckline at $51.55. On the upside, resistance is seen at the two-month high of $67.17, with a more critical barrier at the 200-day SMA at $71.38 and mid-June highs around $71.50 [1].
Market participants are awaiting the US Consumer Prices Index (CPI) reading, due on Wednesday, for further confirmation of the Fed's policy direction and its impact on silver prices [1]. The current environment reflects investor caution, with silver's safe-haven appeal tempered by a stronger US Dollar and expectations of further rate hikes [1].
CONCLUSION
Silver prices have corrected lower after reaching recent highs, pressured by hawkish Fed commentary and ongoing geopolitical uncertainty. Market sentiment remains cautious as investors await key US inflation data, which could further influence the direction of both the US Dollar and silver prices.