- The price of silver surges to $28.60 due to escalating global turmoil.
- Fears of Middle East tensions escalating beyond Gaza will grow as a result of Israel’s response to Iran’s attack.
- Despite the Fed’s tendency to raise interest rates for a longer period of time, US bond yields are gradually declining.
In Wednesday’s early New York session, the price of silver (XAG/USD) rises to $28.60. Significant purchasing activity is seen in the white metal as the safe-haven bid holds steady despite growing tensions in the Middle East. Investors are concerned that since Israel has declared it will retaliate against Iran’s invasion of its land, tensions in the Middle East may rise beyond Gaza.
On Saturday, the Iranian military launched hundreds of missiles and drones in response for Israel’s attack on the Iranian embassy in Syria, which resulted in the deaths of two high-ranking generals. Tehran said that “the matter deemed to be closed” following Iran’s attack on Israel. But Iran will react much more harshly if the Israeli state makes another error, according to the Wall Street Journal. When investors witness further escalation of international tensions, the appeal of bullions increases.
Even if the Federal Reserve (Fed) believes that interest rates will stay higher for a longer period of time, 10-year US Treasury yields drop to 4.63% in the meanwhile. Holding an investment in non-yielding assets, like silver, has a lower opportunity cost as interest-bearing asset yields decline.
The positive economic picture has been bolstered by strong US Retail Sales data for March, which has seen the US Dollar Index (DXY) show strength near 106.20. When the labor market is still tight, households spend more, indicating a positive economic outlook.
Silver technical analysis
Selling pressure is there as the silver price tries to overcome the horizontal resistance drawn from the high of August 3, 2020, at $29.86. Given that the 20-week Exponential Moving Average (EMA) at $24.85 is sloping higher, the long-term picture for the white metal is positive.
Strong upward momentum is shown by the 14-period Relative Strength Index (RSI), which moves into the bullish zone of 60.00–80.00.
Silver weekly chart
