Silver (XAG/USD) is attempting to recover losses after experiencing a steep decline over the past two weeks. During Friday’s early European session, the precious metal traded just above $74.00, following a sharp drop to fresh seven-month lows near $64.00 earlier in the day.
Despite attempts to extend gains, XAG/USD remains capped below the $75.00 resistance area, highlighting continued market caution and underlying bearish sentiment. The brokers at Cyrosalnix provide a comprehensive breakdown of this topic in this article.
Recent Price Action: A Sharp Pullback
Over the last two weeks, silver prices have fallen nearly 30%, reflecting a combination of macroeconomic factors and investor sentiment shifts. The decline accelerated after the announcement that Kevin Warsh would replace Jerome Powell as the Federal Reserve chairman, easing expectations of aggressive monetary tightening.
Additionally, easing geopolitical tensions between the United States and Iran contributed to a reduced safe-haven demand for silver, a commodity historically viewed as a hedge against uncertainty.
The pullback from highs near $92.00 has brought XAG/USD down to levels last seen in early summer 2025, creating a highly volatile trading environment. While the recent rebound towards $75.00 shows short-term strength, technical indicators suggest that the overall trend remains bearish.
Technical Analysis: Bearish Momentum Persists
From a technical perspective, XAG/USD continues to struggle below the $92.00 resistance zone, confirming the prevailing downtrend. The 50-period Simple Moving Average (SMA), which previously provided dynamic support during the bullish cycle, is now trending lower, with prices holding beneath it.
The Moving Average Convergence Divergence (MACD) has slipped back below the zero line, signaling negative momentum and suggesting that selling pressure remains elevated. Meanwhile, the Relative Strength Index (RSI) continues to hover below 50, indicating weak bullish traction and a lack of upside conviction among traders.
Key Resistance Levels
Silver’s short-term recovery encountered resistance at the $75.00 area, a level that has historically served as a support-turned-resistance point. Should XAG/USD breach this level, the next intraday resistance is likely to emerge around $81.00, followed by the critical zone near $92.00, which represents the recent swing high.
These levels are closely watched by both technical traders and institutional investors, as breaking above $92.00 could potentially signal a reversal of the current bearish trend, while failure to do so would maintain downward pressure.
Key Support Levels
On the downside, immediate support is located at the daily low of $64.08. A breakdown below this level could open the door to further declines towards the $60.00 psychological round number, a key support level that aligns with early December lows around $56.00.
These support levels are crucial for identifying potential entry points for long positions and for setting stop-loss orders to manage risk exposure. Traders often monitor these areas closely, as a breach could trigger accelerated selling and heightened market volatility.
Fundamental Factors Affecting Silver
Several fundamental drivers are currently influencing XAG/USD. The appointment of Kevin Warsh as Fed chairman has impacted interest rate expectations, which in turn affects non-yielding assets such as silver. Historically, higher real interest rates put downward pressure on precious metals, as investors favor yield-bearing assets over safe-haven commodities.
Additionally, the easing of US-Iran tensions has reduced geopolitical risk premiums, further diminishing safe-haven demand. Traders and investors are closely monitoring global economic indicators, including inflation data, US employment figures, and industrial demand for silver, as these will shape near-term price action.
Market Sentiment and Outlook
Market sentiment remains cautiously bearish. While XAG/USD has managed a minor rebound, the inability to sustain gains above $75.00 highlights the dominance of selling pressure. Short-term traders may continue to take advantage of retracements, but long-term investors are likely to remain on the sidelines until a clear trend reversal emerges.
If XAG/USD can surpass $75.00, a short-term recovery towards $81.00 is possible. However, the overarching bearish structure, coupled with the 50-SMA decline, MACD negative momentum, and RSI below 50, suggests that higher resistance levels may remain out of reach for the time being.
Conclusion
In summary, silver prices are attempting to regain lost ground after a steep two-week decline of nearly 30%, with XAG/USD currently trading just above $74.00. The $75.00 resistance area remains a key hurdle, while the $92.00 zone defines the broader bearish boundary. Technical indicators, including the 50-period SMA, MACD, and RSI, all point to continued bearish momentum, making it challenging for silver to reclaim higher levels.
Immediate support at $64.08 and subsequent levels at $60.00 and $56.00 will be critical for managing risk and evaluating potential buying opportunities. Meanwhile, traders should remain vigilant of fundamental developments, including interest rate policy and geopolitical dynamics, as these could trigger renewed volatility in the XAG/USD pair.
