Silver Rallies on Haven Demand Amid Middle East Risks

Key Moments

Safe-Haven Demand Lifts Silver

Silver (XAG/USD) continued its upward move for a second consecutive day, with prices hovering near $57.80 per troy ounce during Asian trading on Friday. The metal benefited from a pronounced risk-off tone across global markets, as an aggressive selloff in equities pushed investors toward perceived safe-haven assets.

The shift in sentiment helped drive bond yields sharply lower, which in turn supported demand for non-interest-bearing assets such as Silver. With the return on fixed-income instruments falling, the relative cost of holding yield-free precious metals eased, adding to the bid under XAG/USD.

Geopolitical Tensions in the Middle East Add to Bullish Impulse

Heightened geopolitical risk in the Middle East further underpinned Silver’s appeal as a defensive asset. Investors monitored mounting frictions involving Saudi Arabia and Iran-backed Houthi forces in Yemen, which have recently intensified.

Concerns were amplified by an event earlier in the week in which an Iranian projectile hit and sank a Singapore-flagged container vessel in the Strait of Hormuz, a key maritime chokepoint. The combination of conflict escalation and shipping disruptions in this strategic waterway strengthened the case for safe-haven allocations, including into precious metals.

Market Focus on Fed Path and Rate Expectations

Against this backdrop, traders continued to reassess the trajectory of U.S. monetary policy. Recent firm U.S. economic releases have reinforced expectations that borrowing conditions could tighten further.

Data from the CME FedWatch Tool showed that participants were assigning roughly a 72% probability that the Federal Reserve would leave interest rates unchanged at its upcoming meeting. At the same time, the implied likelihood of a rate increase in December had climbed to 92%, signaling market conviction that policy could become more restrictive later in the year.

CTA Positioning Shifts Support Precious Metals

Flows from systematic traders also contributed to the move in Silver and other precious metals. According to TD Securities, “CTAs are extremely active cross-asset today,” with “notable short-covering across the board in the rates complex.”

This repositioning was described as “helping CTAs to reverse course on yesterday’s large-scale gold selling,” while “silver, platinum and palladium are also all seeing CTA short covering,” alleviating some of the systematic selling pressure that had previously weighed on the space.

Technical Picture: Bias Remains Bearish Despite Bounce

On the daily chart, XAG/USD was last seen near $57.80, with price action extending its move below both short- and medium-term trend gauges. This configuration keeps the short-term technical outlook tilted to the downside.

Silver is trading beneath the nine-day and 50-day Exponential Moving Averages (EMAs), indicating that recovery attempts are likely to encounter resistance while the broader downtrend remains intact. The 14-day Relative Strength Index (RSI) stands at 38.85, holding in a low-neutral band that signals ongoing downside pressure without yet showing extreme oversold conditions. The latest FXS Fed Sentiment Index, at 127.51, continues to point to macro policy expectations that are unfavorable for precious metals.

On the upside, immediate resistance is located at the nine-day EMA around $58.81, which is likely to act as the first hurdle for any attempt to extend gains. A more robust ceiling sits near the 50-day EMA at $62.46, marking the top of the prevailing corrective pattern.

The available technical signals do not highlight clear nearby support reference points. As a result, market participants may look to recent swing lows and key psychological round levels as potential support areas. The bearish technical stance is expected to persist while XAG/USD trades below the cluster of moving average resistance.