Silver (XAG/USD) fell more than 3.5% on Tuesday, trading around $65.50, its lowest level since March 23, as selling pressure intensified amid rapidly evolving headlines related to the Middle East conflict [1]. The decline was exacerbated by comments from US President Donald Trump, who stated on Truth Social that 'the United States must, of necessity, respond to this attack' after Iran allegedly shot down a US Apache helicopter over the Strait of Hormuz. This stance marked a sharp contrast to his earlier remarks suggesting that negotiations with Iran were nearing completion [1].
The heightened geopolitical uncertainty prompted investors to seek safety in the US Dollar, with the US Dollar Index (DXY) rebounding toward the 100.00 mark after trimming earlier losses [1]. Silver also faced additional headwinds from rising expectations that the Federal Reserve may need to raise interest rates to counter inflationary pressures linked to elevated oil prices [1].
Market participants are now focused on the upcoming US Consumer Price Index (CPI) report, scheduled for Wednesday. A hotter-than-expected CPI reading could reinforce expectations for higher-for-longer interest rates, potentially strengthening the US Dollar further and adding pressure on non-yielding assets like silver [1].
Technical analysis indicates a bearish near-term outlook for silver, with the price remaining below the 20-day Simple Moving Average (SMA) at approximately $75.26 and even below the lower Bollinger Band near $65.79. The Relative Strength Index (RSI) is around 33, signaling near-oversold conditions, while the MACD remains negative, suggesting sellers are still in control. Key support is identified at $60.00, with a decisive break below this level potentially triggering a deeper correction, while resistance levels are seen at $65.79, $75.26, and $84.72 [1].
CONCLUSION
Silver's sharp decline reflects a combination of geopolitical tensions and expectations of tighter US monetary policy, both of which are driving investors toward the US Dollar and away from non-yielding assets. The market's focus now shifts to the upcoming US CPI report, which could further influence silver's trajectory depending on the inflation outcome.