Silver Price Forecast: Silver prices (XAG/USD), have dropped to around $35.45 during Thursday’s European trading session. This marks the third day in a row that silver has fallen, losing nearly 1.5% of its value. Even though silver reached a high of $36.90 earlier this week—the highest in over ten years—it’s now facing selling pressure. Surprisingly, this drop is happening despite growing tensions in the Middle East, which usually make safe-haven assets like silver more attractive.
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Why Are Silver Prices Dropping?
Middle East Tensions and Safe-Haven Assets
Tensions in the Middle East are heating up. According to reports from The New York Times, Israel may soon launch an attack on Iran, based on statements from U.S. and European officials. At the same time, the U.S. is reducing its personnel in the region as the conflict between Israel and Iran grows. Normally, this kind of uncertainty pushes investors toward safe-haven assets like silver, which tend to hold value during unstable times. However, silver prices are still falling.
US Dollar and Trade Policy Uncertainty
Another factor affecting silver is the U.S. dollar’s weakness, caused by uncertainty around U.S. trade policies. The White House recently said it’s ready to send final trade agreements, including tariff rates, to trading partners who aren’t negotiating fairly. Former President Trump posted on Truth Social, saying, “In a week and a half to two weeks, we’ll send letters telling them what the deal is. Take it or leave it.” A weaker U.S. dollar usually makes silver more affordable for investors, which could support its price. But for now, this hasn’t stopped the price drop.
Silver Price Technical Analysis
What the Charts Say
Silver’s recent rally paused after hitting a decade-high of $36.90. Despite the current dip, the short-term outlook for silver remains positive. The 20-day Exponential Moving Average (EMA), a tool traders use to track price trends, is sloping upward and sits around $34.63. This suggests the overall trend is still bullish (positive).
The 14-day Relative Strength Index (RSI), which measures whether an asset is overbought or oversold, has dropped to around 60 after being overbought. This pullback could be temporary, and many expect the RSI to rise again, supporting the bullish trend.
Key Levels to Watch
- Resistance: The $40.00 level is a major hurdle for silver prices moving forward.
- Support: If prices fall further, the October 22 high of $34.87 could act as a key support level, preventing a deeper drop.
What’s Next for Silver?
Despite the current correction, silver’s outlook remains promising due to its status as a safe-haven asset and the upward trend in its technical indicators. Investors are keeping a close eye on Middle East developments and U.S. trade policies, as these could influence silver’s next move. For now, the $34.87 support level and $40.00 resistance level will be critical in determining where silver heads next.
