Key Moments
- Silver (XAG/USD) trades about 6% higher near $90.50 during Wednesday’s European session amid renewed US-Iran tensions.
- The metal bounced after a drop of more than 30% from its record high of $121.61, pressured by expectations around Kevin Warsh succeeding Jerome Powell at the Fed.
- XAG/USD remains below the 20-day EMA at $91.66, with technical signals pointing to a fragile recovery and resistance near $100.
Geopolitical Risk Spurs Safe-Haven Demand
Silver prices (XAG/USD) rose about 6% to $90.50 on Wednesday in European trading. This rally follows renewed geopolitical tension between the US and Iran, triggered by a drone attack on the Abraham Lincoln aircraft carrier in the Arabian Sea. Consequently, investors rotated into safe-haven assets, boosting Silver demand.
Rebound After Sharp Correction
The recovery comes after a steep sell-off. Silver fell more than 30% from its all-time high of $121.61. The decline accelerated after US President Donald Trump nominated Kevin Warsh to succeed Jerome Powell as Fed Chair. Markets viewed Warsh’s potential appointment as bullish for the US Dollar, which reduced Silver’s relative appeal.
Macro Data and Fed Expectations
Investors now focus on upcoming US data. The ADP Employment Change and ISM Services PMI for January will release during North American trading hours. These reports could influence market expectations for Fed policy. According to CME FedWatch, traders do not expect interest rate cuts in March or April.
Technical Picture
XAG/USD trades near $90.50, holding intraday gains but still below the 20-day EMA at $91.66. A move above this level could open the way toward $100. However, failure to break above the EMA keeps the risk tilted to the downside.
| Indicator / Level | Reading / Value | Implication |
|---|---|---|
| Spot price | ~$90.50 | Extends short-term recovery |
| 20-day EMA | $91.66 | Resistance above current price |
| 14-day RSI | 50.76 | Neutral but stabilizing momentum |
Silver FAQs
Why do people invest in Silver?
Silver is a highly traded precious metal. It serves as a store of value and a hedge during inflation. Investors can buy coins, bars, or ETFs that track its price.
Which factors influence Silver prices?
Silver reacts to geopolitical risk, recession fears, and interest rates. A strong US Dollar can limit gains, while a weaker Dollar can push prices up. Supply, recycling, and investment demand also play roles.
How does industrial demand affect Silver?
Silver is used in electronics and solar energy due to its high conductivity. Rising industrial demand can boost prices. Key markets include the US, China, and India, where industrial and jewelry demand matter most.
How do Silver prices relate to Gold?
Silver often follows Gold due to their safe-haven status. The Gold/Silver ratio indicates relative valuation: a high ratio may suggest Silver is undervalued, while a low ratio may indicate Gold is undervalued.
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