Silver prices jumped over 1.8% on Tuesday, breaching the $28.00 level as geopolitical tensions in the Middle East escalated. The precious metal defied strong US economic data, reflecting a growing appetite for safe-haven assets amid the Israel-Hezbollah conflict.
The XAG/USD pair touched a daily high of $28.17 after plummeting to a low of $27.63 earlier in the session. While US economic indicators showed resilience, the market's focus shifted towards the escalating situation in the Middle East, boosting silver's appeal as a safe-haven investment.
Technical Analysis
Technically, silver has consolidated around the $28.50 level after a sharp decline to a two-month low of $27.31. The metal's breach of the crucial $29.00 mark and its key moving averages has shifted the overall sentiment from neutral to bearish. The Relative Strength Index (RSI) currently hovering in oversold territory suggests potential for further price declines.
If the silver price drops below the $28.00 support level, it could accelerate a decline towards the July 29 low of $27.31. A breakdown of this level may expose the $27.00 mark, followed by the 200-day moving average at $25.92.
Conversely, if the price manages to climb above the 100-day moving average at $28.54, it could target the $29.00 level. A sustained move above this level could lead to a test of the 50-day moving average at $29.93, before challenging the psychologically important $30.00 mark.
Market Outlook
The silver market remains volatile due to the interplay of economic fundamentals and geopolitical risks. While strong US economic data typically exerts downward pressure on precious metals, the escalating tensions in the Middle East have overshadowed these factors, driving silver prices higher. Investors will closely monitor developments in the region and any potential escalation of the conflict, which could further support silver prices.
Key Levels to Watch:
- Support: $28.00, $27.31, $27.00
- Resistance: $28.54, $29.00, $29.93
