Silver price corrects nearly 6% to near $86.50 during Thursday’s Asian trading session. The white metal rebounded from an all-time high of $93.51 hit on Wednesday after US President Donald Trump said Iran had confirmed it would stop killing protesters and had no plans for large-scale civilian executions, dampening the appeal of safe haven demand.
Market sentiment remained risk-off as US President Trump threatened military action against the government of Supreme Leader Ayatollah Ali Khamenei over the execution of protesters amid civil unrest in Iran. Tehran’s assurances that it will stop executing civilians has downplayed the risks of US military action.
Meanwhile, the Fed’s expectations that it will not cut interest rates at its policy meeting later this month are also weighing on silver. Speculation about the Federal Reserve pausing its ongoing monetary easing campaign intensified after the release of US CPI data on Tuesday, which showed price pressure remaining steady.
Going forward, the main catalyst for the silver price will be the White House announcement of the new Fed Chairman. US President Trump said in December that he would announce the successor to Fed Chairman Jerome Powell sometime in January. Trump’s comments in recent interviews showed that White House economic adviser Kevin Hassett, former Fed Chairman Kevin Warsh, and current Fed governors Christopher Waller and Michael Bowman are the main contenders to replace Jerome Powell.
Technical analysis of silver
XAG/USD is trading sharply near the $88.50 level at the time of writing. The 20-day EMA rises and settles at $77.48, reinforcing the bullish bias as the price stabilizes well above it. Its positive slope supports the trend and keeps pullbacks contained around the mean.
The 14-day Relative Strength Index (RSI) at 68 (near overbought territory) reflects strong momentum after cooling off from recent extremes, which could cap the immediate upside if it stalls.
As long as the pair remains above the bullish 20 EMA, the bulls maintain control, and extending the advance will remain the base case. A close below the 20-day EMA will shift the bias towards consolidation and open room for further decline towards the January 8 low at $73.85.
(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.
