The price of silver (XAG/USD) rose 2.5% to close to $69.00 during the Asian trading session on Monday, an all-time high. The white metal is strengthening as investors turn to the safe-haven fleet with renewed tensions between Israel and Iran.
According to a report by NBC News, Israeli officials have grown concerned about Iran expanding production of its ballistic missile program and rebuilding its nuclear facilities, which were damaged by Israeli military strikes earlier this year, and are preparing to brief US President Donald Trump on options to attack it again.
The scenario of geopolitical tensions increases demand for safe haven assets, such as silver.
On the Federal Reserve monetary policy front, investors remain confident that the central bank will not cut interest rates at its January policy meeting. The Fed’s dovish outlook for the January meeting did not accelerate, despite the release of weak US inflation data for November.
US CPI data for November showed on Thursday that headline inflation fell to 2.7% year-on-year from 3% in October. Economists expect inflation data to come in higher at 3.1%. The so-called core reading, which excludes volatile food and energy items, fell to 2.6% from the previous estimate and reading of 3%.
Technical analysis of silver
The XAG/USD pair is trading at a high level around $69.02 at the beginning of the week. The 20 period EMA at $61.14 is rising strongly and is well below the price. The wide positive spread confirms the strong uptrend but also highlights extended conditions.
The 14-day Relative Strength Index (RSI) at 77.44 is in overbought territory, and a cooling phase could follow. The rising trend line from $49.96 supports the upside.
With the price extending above the 20 EMA, pullbacks could find support at $61.14, sustaining the advance. Momentum remains strong, but RSI in overbought territory may limit near-term gains; A break below the trend line near $65 would weaken the bias and open the door for a deeper bounce towards the December 3 high near $59.00. Looking to the upside, the psychological level of $60.00 will be a major barrier.
(The technical analysis for this story was written with the help of an artificial intelligence tool.)
Frequently asked questions about silver
Silver is a precious metal that is widely traded among investors. It has been used historically as a store of value and medium of exchange. Although less popular than gold, traders may turn to silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during periods of high inflation. Investors can buy physical silver, in the form of coins or bullion, or trade it through instruments such as exchange-traded funds, which track its price in international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of silver to rise due to its safe-haven status, although to a lesser extent than the price of gold. As a non-yielding asset, silver tends to rise as interest rates fall. Its movements also depend on how the US dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong dollar tends to keep the price of silver at bay, while a weak dollar is likely to push prices higher. Other factors such as investment demand, mining supplies – silver is more plentiful than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in sectors such as electronics or solar energy, as it has one of the highest electrical conductivity of all metals – more than copper and gold. A rise in demand can cause prices to rise, while a fall tends to bring them down. Dynamics in the economies of the United States, China and India can also contribute to price fluctuations: for the United States, and especially China, its large industrial sectors use silver in various processes; In India, consumer demand for the precious metal used in jewelery also plays a major role in determining prices.
Silver prices tend to follow gold movements. When gold prices rise, silver usually follows suit, as its status as a safe haven asset is similar. The gold/silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, may help determine the relative valuation between the two metals. Some investors may consider a high ratio to be an indication that silver is undervalued, or that gold is undervalued. Conversely, a low ratio may indicate that gold is undervalued compared to silver.
