Silver (XAG/USD) prices declined by 1.35% to trade near $61.00 during the Asian session on Tuesday, extending their recent correction. This move comes as oil prices attracted buying interest following reports that Iran fired at least two missiles at commercial ships passing through the Strait of Hormuz, a vital route for nearly one-fifth of the world's energy supply [1]. The incident has reignited concerns about potential disruptions to energy supplies, which have previously contributed to global inflationary pressures, especially in the context of ongoing tensions involving the United States, Israel, and Iran [1].
During the Middle East conflict, silver underperformed as rising energy prices stoked fears of higher inflation and possible interest rate hikes by central banks. Such an environment is typically unfavorable for non-yielding assets like silver, as higher rates increase the opportunity cost of holding them [1].
From a technical perspective, XAG/USD remains bearish in the near term, trading below the 20-day exponential moving average (EMA) at $63.35, with the Relative Strength Index (RSI) near 41, indicating persistent but not extreme selling pressure. Immediate resistance is seen at the 20-day EMA, while key support lies at the psychological $60.00 level; a break below this could see silver revisit its seven-month low of $55.63 [1].
Looking ahead, the release of the Federal Open Market Committee (FOMC) minutes from the June policy meeting on Wednesday is expected to be a major catalyst for silver prices. In the June meeting, the Federal Reserve kept interest rates unchanged at 3.50%-3.75% and signaled a pause on forward-looking policy rate guidance at this time [1]. Investors are anticipated to scrutinize the FOMC minutes for further clues on the Fed's monetary policy outlook, which could influence silver's trajectory.
CONCLUSION
Silver prices have come under pressure due to renewed geopolitical risks and the resulting impact on energy markets and inflation expectations. The market remains cautious ahead of the FOMC minutes, which could provide further direction for silver and other non-yielding assets. Technical indicators suggest a bearish bias persists unless silver can reclaim key resistance levels.