Silver (XAG/USD) trimmed earlier gains on Thursday, trading around $79.62 after easing from a three-week high near $82.00, though it remained up nearly 3% on the day. The price action was driven by ongoing geopolitical headlines from the Middle East, specifically Iran's imposition of new rules for vessels passing through the Strait of Hormuz, a critical waterway for global oil flows. These tensions have kept oil prices elevated, fueling inflation concerns and supporting hawkish central bank expectations, which have capped upside attempts in Silver. However, renewed hopes for a US-Iran deal to end the war in the Middle East provided near-term support for the metal, with technical indicators remaining constructive. XAG/USD held above the 20-day SMA Bollinger middle band at $76.32, with immediate resistance at the upper Bollinger band at $81.43. The Relative Strength Index (14) at 57 indicated buyers retained control, though the Average Directional Index (14) near 12.76 suggested the uptrend lacked strong conviction for now [1].
Meanwhile, the US Dollar Index (DXY) experienced significant volatility. Early in the session, DXY sagged toward 97.60 as global equities surged, with the Nikkei 225 clearing 62,000 for the first time on a session that gained over 5%. US futures were primed for another leg of the Iran ceasefire trade, and West Texas Intermediate (WTI) Crude Oil briefly dropped below $90, tagging the $87 area. This risk-on sentiment was fueled by anticipation that Tehran would respond to the latest US proposal, which included a memorandum to declare an end to the war and a 30-day window for negotiations on nuclear enrichment, frozen Iranian assets, and security in the Strait of Hormuz. President Donald Trump commented on "very good talks" overnight, further boosting risk appetite [2].
However, sentiment shifted as details emerged. Trump had warned earlier in the week of potential strikes if Iran failed to deliver, and Iran's condition for lifting the US naval blockade became apparent. The IRGC continued to issue public notices regarding compliance with Strait of Hormuz regulations, and rumors circulated that the Trump administration might ramp up the Project Freedom escort operation. US gasoline prices tracked near $4.54 a gallon, the highest since July 2022. Hawkish Federal Reserve speeches from Collins and Hammack contributed to a late-session risk-off reversal: DXY rebounded above 98, WTI Crude Oil reversed above $98, and the S&P 500 faded from its intraday record into the red. The sharp reversal was visible on the DXY 15-minute chart, highlighting the return of risk-off sentiment [2].
Technical analysis for Silver suggests a constructive near-term bias as long as it holds above key support levels, with a daily close above $81.43 potentially opening the door for further bullish extension. On the downside, support is seen at $76.32 and $71.21. The broader market awaits Friday's Nonfarm Payrolls (NFP) print, with consensus at 62K versus 178K prior, which could further influence Dollar direction [1][2].
CONCLUSION
Geopolitical developments around Iran and the Strait of Hormuz triggered sharp swings in both Silver and US Dollar markets, with risk-on sentiment giving way to risk-off as details emerged and hawkish Fed commentary intensified. Elevated oil prices and inflation concerns continue to support cautious trading, while upcoming US economic data may further impact market direction. The situation remains fluid, with technical and fundamental factors closely watched by investors.