Silver (XAG/USD) fell more than 3.5% on Tuesday as price action continues to be driven by rapidly changing headlines regarding the war in the Middle East. At the time of writing, XAG/USD is trading around $65.50, which is the lowest level since March 23.
US President Donald Trump said in a Truth Social post that “the United States must of necessity respond to this attack” after Iran allegedly shot down a US Apache helicopter over the Strait of Hormuz.
The comments contrast sharply with Trump’s earlier remarks that negotiations with Iran were in their “final stages” and that an agreement could be reached within days.
Following the latest developments, the US Dollar Index (DXY) recovered from earlier losses and climbed back towards the 100.00 level as investors sought safety in the dollar.
Meanwhile, silver continues to face headwinds amid rising expectations that the Federal Reserve (Fed) may need to raise interest rates to curb inflationary pressures from elevated oil prices.
Traders are eagerly awaiting the U.S. Consumer Price Index (CPI) report due on Wednesday. A hotter-than-expected reading would reinforce expectations of higher interest rates for a longer period, providing additional support for the US dollar and potentially increasing pressure on underperforming assets such as silver.
Technical analysis:
On the daily chart, the short-term bias remains bearish, with price holding below the 20-day uncomplicated moving average (SMA) Bollinger Bands around $75.26 and even below the lower band near $65.79, highlighting continued downward pressure.
Momentum indicators reinforce this benign tone as the Relative Strength Index (RSI) is hovering around 33 in near oversold territory, while the Moving Average Convergence Divergence (MACD) remains negative, suggesting that sellers are maintaining control despite some proximity to tight conditions.
On the upside, immediate resistance appears at the lower Bollinger Band near $65.79, with further hurdles at the middle Bollinger Band near $75.26 and on the upper rise towards $84.72, levels that will need to be reclaimed to ease the current bearish structure.
On the other hand, another notable cushion is the horizontal support at $60.00, where a decisive break would open the door to a deeper corrective leg, while a hold above this lower level could encourage a period of consolidation within the broader downtrend.
(The technical analysis for this story was written with the lend a hand of an AI tool.)
