Silver (XAG/USD) traded nearly 1% higher, reaching around $70.50 during the early European session on Monday, despite escalating conflicts in the Middle East involving the United States, Israel, and Iran. The Yemen-based Houthis, backed by Iran, announced over the weekend that they had targeted 'sensitive Israeli military sites' and vowed to continue such attacks, raising concerns about a broader regional conflict and its potential impact on global markets [1].
The entry of the Houthis into the conflict has heightened fears of persistently higher oil prices, which could further fuel global inflation expectations. This scenario has influenced market sentiment, with traders using the CME FedWatch tool to price out two previously expected Federal Reserve interest rate cuts for the year. Now, there is only a 24.6% chance of at least one rate hike, reflecting a shift toward a more hawkish stance by central banks in response to inflation risks [1].
From a technical perspective, XAG/USD remains under near-term bearish pressure, trading well below the 20-day Exponential Moving Average (EMA), which is descending and capping upside near $75.90. The recent pattern of lower highs and lower lows from the $96.60 area reinforces a downside bias, with sellers defending rebounds toward the 20-day EMA. The 14-day Relative Strength Index (RSI) is in the 20.00-40.00 zone, indicating persistent negative momentum [1].
Immediate resistance is at $75.90, aligned with the 20-day EMA and recent swing reactions, followed by $82.50, which coincides with a prior consolidation shelf. A daily close above $82.50 would be needed to challenge the broader downtrend from early-month peaks. On the downside, initial support is at the recent low near $67.80, and a break below this level could open the way toward the March 23 low around $61.00. Recovery attempts remain vulnerable while price trades beneath $75.90 [1].
CONCLUSION
Silver's price rise above $70 reflects heightened geopolitical tensions and inflation fears, but technical indicators suggest persistent bearish momentum. The market is adjusting expectations for Federal Reserve policy, with rate cuts now seen as less likely. Recovery in silver remains uncertain unless it breaks above key resistance levels.