Silver Price Forecast: XAG/USD Approaches $90.00 as Geopolitical Tensions Support Rally
GlobePRwire
Silver (XAG/USD) continues to extend its bullish momentum, reaching near $90.00 during Wednesday’s Asian trading session as investors seek safe-haven assets amid escalating geopolitical tensions.
The precious metal’s strong performance marks its fourth consecutive trading day of gains, reflecting heightened demand in a climate of uncertainty driven by international political crises and central bank developments. This article by LFtrade offers readers an expert-led breakdown of the subject.
Geopolitical Tensions Drive Silver Surge
The rally in silver is closely tied to civil unrest in Iran, where public dissatisfaction over surging inflation, a weakened Rial against the US Dollar (USD), and government corruption scandals has triggered deadly protests. Hundreds of demonstrators have reportedly lost their lives, intensifying geopolitical risk and boosting the appeal of safe-haven metals.
In response to the unrest, the US President threatened military intervention in Tehran if the Iranian government continues targeting protesters. This escalation has further propelled demand for XAG/USD, as investors move capital into assets perceived as stability hedges during periods of heightened uncertainty.
Fed Independence Concerns Impact Dollar and Silver
Silver’s upward trajectory has been further supported by concerns surrounding the Federal Reserve’s (Fed) independence. Criminal charges against Fed Chairman Jerome Powell over alleged mismanagement of renovation funds at the Fed headquarters initially sparked fears that the central bank’s autonomous status might be compromised. Powell characterized the accusations as a “pretext,” emphasizing that the Fed sets interest rates based on economic conditions and public interest, not political pressure.
The potential erosion of Fed independence led to an immediate decline in the US Dollar, as investors feared an adverse impact on US sovereign credit ratings. In this environment, safe-haven assets like silver benefited from increased inflows, reflecting a classic inverse relationship between the USD and XAG/USD.
Global Central Banks Support Powell, USD Rebounds
However, the US Dollar rebounded strongly after global central bank heads publicly backed Powell. Leaders from the European Central Bank (ECB), Bank of England (BoE), and nine other major institutions collectively stated, “We stand in full solidarity with the Fed System and its Chair Jerome H. Powell,” signaling support for monetary independence and institutional credibility.
This backing mitigated some of the downside pressure on the USD, although the initial risk-off sentiment continues to favor silver accumulation. Market participants are closely monitoring the interplay between geopolitical risk and central bank dynamics, which remains a key driver of XAG/USD volatility.
Technical Analysis: XAG/USD Near All-Time High
From a technical standpoint, XAG/USD is trading near $90.00, reflecting strong bullish momentum. Buyers remain in control, as confirmed by momentum indicators, with the 14-day Relative Strength Index (RSI) at 74.77, overbought and rising from 72.52. The overall trend bias is upward, though the pair is approaching overbought territory. While the bullish bias remains intact, stretched conditions suggest a potential consolidation phase.
Traders should monitor RSI moderation toward 70, which could allow for a healthy reset and a smoother continuation of the rally, as well as a renewed RSI surge toward previous extremes near 85.90, which might trigger a sharp pullback due to momentum fatigue.
Key Levels and Market Sentiment
The support levels are at $86.50 – $87.00, providing a floor for buyers in case of minor corrections. On the upside, resistance levels lie at $90.50 – $91.00, representing a psychological barrier and a potential profit-taking zone.
Market sentiment remains risk-sensitive, with geopolitical developments in Iran and US monetary policy narratives continuing to influence XAG/USD positioning. Investors and traders are advised to remain cautious, balancing momentum-driven opportunities against the risk of short-term reversals.
Safe-Haven Appeal Amid Market Uncertainty
The current rally underscores silver’s role as a classic hedge against market uncertainty. In addition to geopolitical triggers, macro factors such as potential inflationary pressures, dollar fluctuations, and Fed policy credibility are reinforcing its safe-haven demand.
Analysts note that precious metals like XAG/USD often outperform during periods of central bank scrutiny, political crises, and sovereign credit concerns, highlighting their role as a safe-haven asset in times of market uncertainty.
The combination of fundamental risks and technical strength provides a compelling case for continued bullish interest, though short-term corrections remain likely as markets digest news flow and positioning levels.
Conclusion: Silver Price Outlook
In summary, XAG/USD extends its rally to near $90.00, supported by a confluence of geopolitical unrest, safe-haven demand, and central bank credibility concerns. While technical indicators signal strong bullish momentum, overbought conditions suggest potential consolidation in the near term.
With geopolitical risk elevated and monetary policy under scrutiny, silver remains a key asset for hedging uncertainty, positioning XAG/USD as a strategic consideration for both short-term traders and long-term investors.