Silver price analysis: on edge amid the elevated Middle East tensions

Silver price made subtle movements on Tuesday as the deadline of Trump’s ultimatum on Iran approaches. The “wait and see” mood was also observable in other precious metals as well as the US stock market. While the long-term bullish outlook has offered the white metal a steady floor, heightened inflation concerns are weighing on it. In addition to the geopolitical tensions, investors are also eyeing the FOMC minutes on Wednesday and US inflation data on Friday.

Trump’s threats fuel “wait and see” mood 

In a Truth Social post on Tuesday, the US President asserted, “A whole civilization will die tonight, never to be brought back again. I don’t want that to happen but it probably will.” 

The threat comes less than 24 hours since his previous threat that the US military will attack Iran’s power plants and bridges if it does not reopen the crucial Strait of Hormuz. In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) has indicated that it will respond “in kind”, ensuring that the US and its allies are deprived of oil and gas for many years should Trump and the Israeli forces attack the country’s civilian facilities. 

Amid the geopolitical tensions, investors have maintained a “”wait and see” mood. The US stock market made subtle movements with the S&P 500 index hovering around $6,600 for the second session in a row. Similarly, Dow Jones traded sideways for the fourth consecutive session while the tech-heavy Nasdaq 100 hovered below the long-term 200-day EMA and short-term 25-day MA. 

Ordinarily, the risk-off sentiment bolsters silver price and other conventional safe-haven assets. However, the energy shock fueled by the blockage of the all-important Strait of Hormuz has heightened inflation concerns. Subsequently, investors are increasingly betting that the Fed and other major central banks will be rather hawkish. 

An environment of higher interest rates tends to be bearish for silver price. Nonetheless, its bullish long-term outlook has given it a steady floor above the 200-day EMA. In the ensuing sessions, the market will also be reacting to the FOMC minutes on Wednesday and US inflation data on Friday. A stronger US dollar and rising Treasury yields may further weigh on the white metal. 

Silver price technical analysis

Silver price chart | Source: TradingView

On Tuesday, financial markets returned from the long Easter weekend rather timidly. In addition to the low trading volumes, investors remain cautious over the ongoing conflicts in the Middle East. Subsequently, silver price is in consolidation for the second session in a row. 

Following the losses recorded late last week, the white metal has lacked enough momentum to resume its attempt at breaking the resistance along the short-term 25-day EMA at $75.85. Amid the mixed signals regarding the end of the US-Iran war, its rebound may remain curbed at that zone for a while longer. Notably, that has been the case for about three weeks now. 

On the lower side, $65.50 continues to offer steady support to silver price as its bullish long-term outlook sustains it above the 200-day EMA. In the immediate term, the bulls are keen on defending the support at $70. This places it within a rather tight range as investors eye the ongoing conflicts and US inflation data. 

A rebound past that range may have the white metal hovering near the 50-day EMA at $78.15. For as long as silver price trades below the months-long bullish trendline, $80 is set to be a strong resistance zone.