Silver (XAG/USD) experienced renewed selling pressure on Monday, falling more than 2% to trade around $58.30. This decline followed renewed fighting between the United States and Iran over the weekend, which heightened energy-driven inflation concerns and reinforced expectations of a Federal Reserve interest rate hike later this year [1]. According to the CME FedWatch Tool, traders are now pricing in a 71% chance of a rate hike in September, up from 57% a week earlier. Higher borrowing costs typically weigh on non-yielding assets like silver [1].
The US economic calendar was light on Monday, keeping traders focused on geopolitical developments. Market participants are now turning their attention to the upcoming US Consumer Price Index (CPI) data, scheduled for Tuesday, which could further influence near-term interest rate expectations and drive the next move in XAG/USD [1].
Technically, silver remains range-bound between $55.50 and $62.50, a structure that has persisted since late June. The metal is trading well below its 200-day Simple Moving Average (SMA) at $70.37 and the 100-day SMA at $73.87, maintaining a bearish bias. Momentum indicators show continued weakness, with the Relative Strength Index (RSI) near 37 and below the neutral 50 level, while the MACD indicator is slightly positive but does not confirm a recovery [1].
On the upside, resistance is seen at $62.50, with a break above potentially opening the path toward the 200-day SMA at $70.37 and the 100-day SMA at $73.87. On the downside, $55.50 remains key support; a decisive break below this level could end the current consolidation phase and expose silver to further declines [1].
CONCLUSION
Silver's price action remains under pressure due to heightened geopolitical tensions and increased expectations of a Fed rate hike. With technical indicators signaling continued weakness and traders awaiting key US inflation data, the market outlook for silver remains bearish in the near term.