Silver Rises as Ceasefire Hopes Ease Energy Fears

Key Moments

Geopolitical Developments Support Ongoing Silver Rebound

Silver prices (XAG/USD) continue their recovery for a third consecutive trading day on Wednesday, gaining more than 2% and hovering near $73.00 in the European session. The move higher comes as the metal draws support from intensified diplomatic efforts by United States (US) President Donald Trump to bring an end to the conflict in the Middle East.

According to earlier Reuters reports, President Trump is seeking a month-long ceasefire agreement with Iran and has put forward a 15-point settlement framework. The reported proposal includes measures aimed at restricting Iran’s ability to develop nuclear weapons and prohibiting uranium enrichment activities on Iranian territory.

Market sentiment has improved on expectations that a ceasefire could pave the way for a normalization of energy flows through the Strait of Hormuz. Such an outcome would likely reduce perceived supply disruptions, exert downward pressure on oil prices, and could prompt traders to scale back hawkish expectations for policy tightening by global central banks.

Shifting Rate Expectations and Safe-Haven Dynamics

In theory, periods of elevated geopolitical risk tend to boost demand for safe-haven assets such as Silver. However, in recent weeks the metal had underperformed as sharply rising energy prices led market participants to curb expectations for interest rate cuts by major central banks over the remainder of the year.

A backdrop of higher-for-longer policy rates or an extended pause in easing plans is typically unfavorable for non-yielding assets like Silver. This rate-sensitive dynamic has weighed on the metal despite ongoing geopolitical concerns.

At the same time, the US Dollar (USD) is trading modestly firmer as Iran continues to reject statements from President Donald Trump about its participation in direct talks with the US. A stronger USD can be another headwind for dollar-priced commodities, including Silver.

Technical View: Rebound Faces Key Resistance Levels

XAG/USD is trading higher around $73.10, but near-term technical signals continue to point to a bearish bias. Prices remain well below the 20-day Exponential Moving Average (EMA) positioned near $78.30, preserving the pattern of lower highs that has persisted since the $93.80 peak.

The 14-day Relative Strength Index (RSI) has recovered to around 41 after spending time in the 20.00-40.00 band. This suggests that the recent downside momentum is pausing, although the broader bearish tilt is still intact.

The immediate support is seen around the recent $72.80 region. A downside break of that level would open the door toward the late-month low near $67.90 as the next target. If weakness extends further, Monday’s low at $64.01 would gain importance as a subsequent support area.

On the upside, initial resistance is located at $75.30. Above that, the $79.30 area – which coincides with the declining 20-day EMA – forms a critical resistance cluster. A daily close above this band would be required to alleviate the bearish technical tone and redirect market attention toward the $83.00 zone.

(The technical analysis of this story was written with the help of an AI tool.)

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.