Silver Price Forecast: Geopolitical Concerns Overshadow Rate Cut Speculations

Silver Prices Respond to Geopolitical Tensions

Silver prices ticked up on Friday but surrendered most early gains as news broke of an Israeli attack on Iran, heightening fears of a broader regional conflict and boosting silver’s appeal as a safe-haven asset. Currently, the market’s focus on silver has shifted from monetary policy implications to the geopolitical situation in the Middle East, which has been the primary factor driving silver prices in recent weeks.

At 11:55 GMT, XAG/USD is trading $28.25, up $0.004 or +0.01%.

Details of the Israel-Iran Conflict

This latest escalation involves an Israeli missile strike on Iranian territory, a part of the ongoing retaliatory actions between the nations that could deepen regional instability. Iranian media reported that the explosions were due to air defenses engaging three drones over Isfahan, indicating a high-tension scenario that may escalate further.

Market Uncertainty Ahead

As global markets head into the weekend, there is significant uncertainty about potential developments in the region, particularly concerning any targeting of nuclear facilities. The overall market response has been relatively subdued so far, but the ongoing conflict poses a risk of prolonged market instability.

Federal Reserve and Economic Indicators

Despite these geopolitical tensions, the Federal Reserve has signaled a steady approach to interest rates, influenced by ongoing inflation control and strong economic indicators. This stance contrasts with other major central banks, like the European Central Bank, which appears set to reduce its policy rates soon.

Short-Term Market Forecast

In the short term, silver prices are likely to remain volatile as the geopolitical situation develops. The interplay between these tensions and central bank policies, especially from the Fed and ECB, will significantly influence silver’s price movements. Investors should stay alert to both geopolitical news and economic data releases in the coming weeks.

Technical Analysis

All the major trends are up, but silver (XAG/USD) is exhibiting a mixed performance on Friday as traders contemplate chasing the market higher or playing for a normal pullback into a value area.

A trade through $29.80 will signal a resumption of the uptrend, while a move through $27.59 changes the short-term trend to down. It also shifts momentum to the downside. This could trigger a further decline into the support zone at $26.90 to $26.17.

The daily chart indicates there is plenty of room to the downside before intermediate support is reached with the 50-day moving average coming in at $24.92.