Silver Slides as Geopolitical Tensions Support US Dollar Strength

Key Moments

Silver Retreats Below Psychological Support

Silver (XAG/USD) is under pressure on Thursday, surrendering recent gains and slipping back beneath the $70.00 mark. At the time of writing, the metal is quoted around $69.35, marking a second straight day of declines and signaling a loss of the constructive tone seen earlier in the week.

The reversal coincides with a stronger US Dollar, which is drawing renewed safe-haven inflows as expectations for a ceasefire in the Middle East fade. The shift in sentiment is weighing on risk appetite and limiting demand for precious metals.

Middle East Ceasefire Prospects Deteriorate

Geopolitical headlines continue to dominate market focus. Iran has turned down a US-backed 15-point framework aimed at ending the conflict in the Middle East and has dismissed the prospect of talks with Washington. According to an anonymous official from the Islamic Republic, quoted on an English-language TV broadcast, Iran’s government has its own conditions for any peace agreement, AP reports.

At the same time, drones and missiles remain active in the region, while the Strait of Hormuz – a key chokepoint for about a fifth of global crude oil shipments – is described as effectively closed. The disruption is adding strain to the global economy and undermining risk sentiment, reinforcing the US Dollar’s position as a preferred safe-haven asset.

Technical Picture: Bearish Channel Still Dominant

From a technical standpoint, silver continues to trade inside a descending channel, with upside attempts capped below the $73.00 region. The 4-hour chart shows XAG/USD at $69.35, reflecting a mildly bearish short-term bias.

The 50-period Simple Moving Average (SMA), currently near $73.40, is acting as dynamic resistance and aligning with the broader downtrend structure. Momentum indicators reinforce the negative tone: the Relative Strength Index (RSI) has slipped from readings above 50 back toward the mid-40s, while the Moving Average Convergence Divergence (MACD) green histogram bars are shrinking following a prior positive phase.

The overall configuration suggests that sellers retain control while prices remain below the 50-period SMA and the channel resistance. A break above the $73.00-$74.70 band would be needed to challenge the prevailing bearish pattern, whereas a move under $69.00 could expose the $65.96 area and then the recent low near $60.50.

Silver as an Investment Asset

Silver is actively traded by investors as both a store of value and a medium of exchange. Although it is not as prominent as gold, market participants often use silver to diversify portfolios, gain exposure to its intrinsic value, or seek protection during periods of elevated inflation. Access to silver can be obtained through physical holdings, such as coins and bars, or via instruments like Exchange Traded Funds that mirror its price performance in international markets.

Key Drivers of Silver Prices

A broad set of macro and market forces can influence silver’s price dynamics. Periods of geopolitical instability or heightened fears of a deep economic downturn may support silver due to its safe-haven characteristics, though typically to a lesser degree than gold. As a non-yielding asset, silver tends to be sensitive to interest rate trends, benefiting when rates decline.

Silver is priced in US Dollars (XAG/USD), so Dollar movements are an important factor. A firm US Dollar often restrains silver prices, while a weaker Dollar can provide a tailwind. Additional influences include investment demand, mining output – silver is significantly more plentiful than gold – and recycling flows.

Industrial and Cross-Metal Dynamics

Industrial usage is another critical pillar of silver demand. The metal is heavily utilized in industries such as electronics and solar energy, supported by its very high electrical conductivity, which exceeds that of copper and gold. Stronger industrial demand can lift prices, whereas a slowdown tends to exert downward pressure.

Economic developments in the US, China, and India can also sway silver markets. Large industrial sectors in the US and especially China rely on silver in multiple applications, while in India, jewelry consumption plays a meaningful role in shaping demand.

Silver’s price path also frequently tracks that of gold. When gold moves higher, silver often follows due to their shared safe-haven profile. The Gold/Silver ratio – the number of silver ounces required to match the value of one ounce of gold – is used by some investors to gauge relative value. A high ratio can be interpreted as silver being undervalued or gold overvalued, while a low ratio may signal the opposite relationship.