Silver (XAG/USD) fell 2% to near $76.50 during the European trading session on Tuesday, reversing gains from the previous four trading days as market participants grew cautious over renewed concerns about peace in the Middle East [1]. The decline followed reports from Iranian state media of explosions in Bandar Abbas, with US Central Command later claiming responsibility for the incident, describing it as 'self-defense' to protect US troops from Iranian threats, according to BBC [1]. Despite these tensions, US President Donald Trump stated that negotiations with Iran are 'progressing well,' suggesting that hopes for a US-Iran deal remain alive [1].
The uncertainty surrounding US-Iran relations contributed to a sharp recovery in oil prices, with WTI crude trading 1.5% higher near $91.00 at the time of reporting [1]. Elevated oil prices have heightened concerns about US inflation, leading traders to reduce expectations for a dovish Federal Reserve stance [1]. This environment is seen as negative for non-yielding assets like silver, as the prospect of the Fed holding or raising interest rates weighs on the metal's appeal [1].
From a technical perspective, silver is trading around $76.56, struggling to reclaim the 20-day exponential moving average (EMA) at $77.66 [1]. The Relative Strength Index (14) remains in the 40.00-60.00 range, indicating a sideways trend [1]. Key resistance is at the 20-day EMA, with a break above potentially targeting the May 15 high at $83.88, while a daily close below the rising trend line at $75.96 could expose silver to further downside towards $70.00 [1].
CONCLUSION
Silver prices have come under pressure due to renewed geopolitical tensions in the Middle East and rising oil prices, which have increased inflation concerns and reduced expectations for Federal Reserve rate cuts. The technical outlook remains uncertain, with key support and resistance levels in focus as traders assess the evolving situation.