Silver Price Forecast: XAG/USD bounces back to near $36 as Middle East conflict lingers
LONDON (June 20) Silver price (XAG/USD) claws back half of its early losses and rebounds to near $36.10 during the European trading session on Friday. The white metal attracted bids after revisiting the two-week low around $35.50 as tensions in the Middle East remain intact amid the aerial war between Israel and Iran.
Heightened geopolitical tensions increase demand for safe-haven assets, such as Silver.
Earlier in the day, the Silver price faced a sharp sell-off after comments from the White House signaled that the United States (US) will not involve in the Israel-Iran war immediately.
The demand for safe-haven assets increased sharply on Thursday after a report from Bloomberg showed that senior US officials are preparing for the possibility of a strike on Iran as soon as the weekend.
Meanwhile, consistent warnings from the Federal Reserve (Fed) that new economic policies imposed by US President Donald Trump after returning the White House will be inflationary for the economy have also increased the safe-haven appeal of the Silver price.
Silver performs better in a high-inflation environment, but a restrictive monetary policy stance by the Fed bodes poorly non-yielding assets.
On Wednesday, the Fed warns of upside inflation risks after leaving interest rates steady in the range of 4.25%-4.50%. “We’ve had goods inflation moving up a bit and expect to see more of that in summer,” Fed Chair Jerome Powell said in the press conference following the interest rate decision.
Silver technical analysis
Silver price recovers sharply after attracting bids near the 20-day Exponential Moving Average (EMA), which trades around $35.50. The white metal has corrected after posting a fresh over-a-decade high around $37.30 on Wednesday.
The 14-day Relative Strength Index (RSI) declines to near 60.00. A fresh bullish momentum would emerge if the RSI holds above that level.
Looking down, the October 22 low around $34.87 will act as key support zone. On the upside, the June 18 high of $37.32 will act as key hurdle.
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