The global silver market faced significant downward pressure this week, with the XAG/USD pair plunging to the $66.50 level, a critical technical juncture. This decline underscores persistent bearish control as the price trades decisively below the pivotal 100-day Simple Moving Average (SMA), a key indicator of the intermediate-term trend.
Technical analysis reveals the $66.50 level has acted as both support and resistance recently, making its breach a focal point for traders. The Relative Strength Index (RSI) hovers near oversold territory, which may prompt a short-term bounce, but the overall trend remains negative. Key resistance is established at the 100-day SMA (~$67.20) and the $68.00 psychological handle, while a break below $66.50 could target the $65.00 support zone.
Fundamentally, the decline is driven by a resilient US dollar and market expectations for a "higher-for-longer" interest rate environment, which diminishes the appeal of non-yielding assets like silver. Furthermore, renewed geopolitical tensions contributed to the sell-off. On Tuesday, silver prices fell over 2.5% after Iran officially rejected proposed de-escalation talks with the United States. This development was interpreted by markets as cementing a prolonged stalemate rather than imminent conflict, leading to a "risk-off" move that bolstered the US dollar and pressured dollar-denominated commodities.
Market sentiment, as shown by Commitments of Traders (COT) reports, indicates a contraction in speculative net-long positions for silver futures. Analysts, including Dr. Anya Sharma of Global Markets Analysis LLP, note that for the bearish trend to reverse, a fundamental catalyst is required, such as a shift in central bank policy, a weakening dollar, or a surge in physical investment demand. The silver price forecast remains cautiously bearish in the near term, with its path dependent on the interplay between technical levels, dollar strength, interest rate expectations, and geopolitical developments.
