Silver prices tumbled to their lowest since early May during European trading on Thursday, with XAG/USD sliding below $72.50, as a flare-up in Middle East tensions combined with anticipation of crucial U.S. inflation data to strengthen the U.S. dollar and pressure precious metals. The sell-off provides a warning signal for cryptocurrency markets, which often share similar sensitivity to macro drivers.
The U.S. military conducted overnight strikes inside Iran, reportedly targeting a military site and downing four Iranian attack drones near the Strait of Hormuz. The escalation spooked commodity markets, sending crude oil higher and fueling a flight to the greenback. Since silver is priced in dollars, the stronger currency made the metal more expensive for foreign buyers, accelerating the decline.
Adding to the pressure, investors are bracing for the release of the U.S. Personal Consumption Expenditures (PCE) Price Index – the Federal Reserve’s preferred inflation gauge. The headline PCE is expected to rise 3.8% year-on-year in April, up from 3.5% in March, while the core reading, excluding food and energy, is forecast to tick up to 3.3%. A hotter-than-expected print could reinforce bets that the Fed will keep rates elevated or even hike again, further boosting the dollar and Treasury yields, and diminishing the appeal of non-yielding assets such as silver – and by extension, digital assets like Bitcoin.
Technical indicators underscore the bearish outlook. XAG/USD has broken below the key $72.50 support with rising volume, and the Relative Strength Index (RSI) has slipped under 50, with a MACD sell signal triggered. Next supports lie at $71.00 and then the 200-day moving average near $69.50. These chart patterns highlight an environment where risk appetite is fading – a dynamic that often spills over into cryptocurrencies, which can face selling pressure when the dollar strengthens and real yields rise.
For crypto traders, the twin narratives of geopolitical instability and sticky inflation create a complex backdrop. While gold managed to catch some safe-haven bids, silver’s dual role as an industrial metal dragged it lower, mirroring how altcoins can be hit harder than Bitcoin during risk-off episodes. The upcoming PCE data and further developments in the Middle East will be critical in determining whether the current risk-off wave deepens, potentially dragging Bitcoin below key support levels, or if digital assets can decouple as a sovereign hedge.
