Silver price analysis: XAG/USD trades flat as US hints at fresh combat

Silver price is trading flat as headlines on the geopolitical tensions in the Middle East continue to impact the financial markets. As the fragile US-Iran ceasefire agreement nears its expiry, investors are worried that the warring countries may engage in fresh attacks. However, they do not negate the possibility of a second round of peace talks. 

These uncertainties have placed the silver market in a consolidation phase. On the one hand, it continues to trade above the short and medium-term EMAs. However, it lacks enough momentum to sustain a surge above the bullish trendline that shaped its price movements till the peak of the US-Iran war in mid-March. At the time of writing, it was down by 1.32% to trade at $78.68.

Silver price caught up in the renewed uncertainties

Geopolitical tensions and inflation woes continue to influence financial markets close to a month since the US-Iran war began. Late last week, Iran declared the reopening of the all-important Strait of Hormuz to commercial vessels; a move that boosted the risk appetite. Indeed, the news shifted the fear & greed index to the greed end of the spectrum, while bolstering silver price back above the months-long bullish trendline. Iran has since reversed this decision, indicating that the IRGC is in full control of the chokepoint. 

With the porous US-Iran ceasefire agreement set to expire on Wednesday, Trump has asserted that he is unwilling to extend the agreement. He has further indicated that “he expects to be bombing” if no progress is made on the peace talks. 

The renewed hostilities have heightened fears of inflation and trade disruptions; further weighing on non-yielding assets like silver and gold. Meanwhile, Treasury yields edged higher on Tuesday, with the benchmark 10-year yields rising above the short-term 25-day EMA. In the ensuing sessions, headlines on the US-Iran peace talks will continue to impact the silver market. 

Silver price technical analysis

Silver price edged lower on Tuesday while remaining within the tight range that has defined its movements for a week now. Last week, it rallied above the bullish trendline that had shaped its path for months until the peak of the US-Iran war in mid-March. 

The surge was fueled by optimism over a peace deal between the warring countries in the Middle East. However, concerns over fresh combat have reversed the market sentiment from increased risk appetite to a “wait and see” mood. 

Less than 24 hours to the expiry of the fragile US-Iran ceasefire agreement, silver price will likely remain range-bound between the 25-day EMA at $77.15 and the resistance level of $80.90. 

With heightened volatility, the range may widen slightly to between $75.85 and $81.63. Beyond that, signs of fresh attack may push silver price to a two-week low at $72.50. On the upside, progress in the peace talks may bolster the white metal back above the bullish channel as buyers eye the upper resistance zone of $82.95.