The precious metals market has witnessed a notable retreat in recent days, with silver prices dropping below the $36 per ounce mark. This decline comes in response to easing geopolitical tensions in the Middle East, particularly following the announcement of a ceasefire agreement between Israel and Iran. The truce, brokered through U.S. and Qatari channels, has reduced demand for silver as a safe-haven asset, prompting investors to redirect capital toward higher-risk, higher-yield assets.
This shift in investor appetite toward riskier assets is a direct result of the diminished likelihood of military escalation, which in previous weeks had been a key driver of demand for silver and other metals. As noted by Alex Hines, a commodities strategist at HBC Futures, the market is now unwinding the premium previously built in due to concerns over supply disruptions and broader regional conflict.
From a technical standpoint, silver now faces key resistance levels, with prices stabilizing near $36 after rebounding from the 200-period moving average support at $35.72. Despite minor attempts to rise, price action remains indecisive, characterized by candlesticks with small bodies and long wicks—reflecting a lack of control from either buyers or sellers.
On the upside, breaking above the $36.43 resistance is essential to reignite bullish momentum. Conversely, a breakdown below the ascending trendline could signal a move toward $35.60 or even $35.23. For now, silver appears to be in a state of consolidation, as traders watch inflation and labor market data from the U.S. for clearer directional cues.
At the same time, attention has shifted to U.S. monetary policy, where several Federal Reserve officials have hinted at a possible interest rate cut in July. The probability of a cut has increased to 68%, according to CME FedWatch data, driven by softening labor market indicators and declining inflation. A rate cut would likely weaken the U.S. dollar and lower the opportunity cost of holding non-yielding assets like silver—potentially boosting its appeal. Nevertheless, Fed Chair Jerome Powell remains cautious, stating that the central bank needs "greater confidence" before making any policy moves.
The silver market is currently caught between easing geopolitical risks and uncertainty over future Fed policy. This has kept prices range-bound, with investors staying on the sidelines until more decisive economic signals emerge. Until then, silver remains under pressure, awaiting a potential breakout in either direction.
