Silver Price Forecast: XAG/USD extends recovery to near $90.50 on renewed US-Iran tensions
LONDON (February 4) Silver price (XAG/USD) recovers further on Wednesday, trades 6% higher to near $90.50 during the European trading session. The white metal strengthens as tensions between the United States (US) and Iran have renewed, following the drone attack by the Iranian military on Abraham Lincoln aircraft carrier in the Arabian Sea, according to a report from Reuters.
Investors tend to shift to the safe-haven fleet in times of geopolitical tensions, a scenario that boosts the appeal of precious metals, such as Silver.
The white metal has been trading higher from the previous day as it regained ground after crashing over 30% from its lifetime peak of $121.61. Silver price corrected vertically after United States (US) President Donald Trump nominated Kevin Warsh for the succession of Federal Reserve (Fed) Chairman Jerome Powell.
Investors took Warsh’s appointment as favorable for the US Dollar (USD), given his historical preference for a strong US Dollar in his prior term at the Fed.
Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
In Wednesday’s session, investors will focus on the US ADP Employment Change and the ISM Services PMI data for January, which will be published during North American trading hours. The data will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
According to the CME FedWatch tool, the Fed is unlikely to cut interest rates in its policy meetings in March and April.
Silver technical analysis
XAG/USD trades higher to near $90.50 at the time of writing. The price holds below the 20-day Exponential Moving Average (EMA), now at $91.66, underscoring a fresh bearish tilt as the average turns lower. The gauge's decline over recent sessions caps rebound attempts.
The 14-day Relative Strength Index (RSI) at 50.76 (neutral) is edging higher from prior readings, signaling stabilizing momentum.
A daily close back above the 20-day EMA would reduce downside pressure and open a recovery path towards the psychological level of $100.00. While, failure to reclaim the 20-day EMA would keep risks skewed lower as trend conditions soften.
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