Silver drops 2.57% as German 19% VAT on silver sales weighs on demand

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Silver drops 2.57% to $74.98 today

Highlights

Germany's move to impose a 19% VAT on silver, platinum, and palladium transactions significantly increases costs and is likely to dampen demand in a major European market.
Regulatory uncertainty is increasing as the US considers requiring precious metal storage diversification and India faces stricter compliance pressures following a surge in counterfeit silver.
Silver trades below key short-term moving averages amid strong bearish momentum signals, with a high probability of range-bound action between $70.00 and $78.00 barring a break below $74.19 support.

Demand outlook weakens as tax hikes and compliance risks emerge

The German Ministry of Finance clarified that a 19% value-added tax now applies to silver, platinum, and palladium purchases within Germany, including those held in third-party storage, raising transaction costs for both investors and providers and likely suppressing demand in one of Europe's key markets. In the United States, a bill under consideration could require geographic diversification of precious metal storage for derivatives settlements, introducing regulatory uncertainty for the market. Meanwhile, a rise in counterfeit silver bars and coins in India has led to increased calls for stricter mandatory hallmarking and licensing of refiners, posing further compliance challenges for the industry.

Weaker momentum as silver hovers above technical support

Technically, XAG has broken below the SMA-20 at $78.49 and SMA-50 at $76.78, with the price currently positioned just above the SMA-200 at $74.19. The Ichimoku Kijun level at $80.13 stands as the closest resistance. Oscillator readings show an RSI of 49.32, Stoch RSI at 21.64 (pointing to potential oversold conditions), and a CCI of -34.83, all pointing toward weaker momentum. Both MACD and ADX on the daily chart are neutral, as is the Awesome Oscillator. BBP is at -0.34, classified as 'oversold', signaling that sellers continue to dominate, while the recent price action near intraday lows reflects sustained volatility.

Bearish bias persists as volatility and downside risks dominate

In the short term, XAG is expected to remain volatile within a $70.00 to $78.00 band, reflecting typical recent price swings. The probability of a further decline exceeds 80%, given prevailing bearish daily signals and only limited bullish cues from weekly momentum indicators. Sustained upside would require a decisive break above $80.13 with confirmation from daily momentum improvements, while a breach below the recent lows and SMA-200 would likely open the door to a move toward the $70.00 level.

Anton Kharitonov, expert at Traders Union, sees mounting fundamental headwinds for silver amid clear technical weakness. He notes that the German VAT clarification directly raises transaction costs, while regulatory uncertainty in the US and operational risks in India further dampen sentiment. Silver remains below key resistance, with momentum and oscillators not supporting a sustained rebound. "Unless XAG can decisively reclaim $80.13, I expect downside pressure to persist and will remain cautious on new long positions."

Earlier, analysts noted that silver's outlook was broadly rangebound amid mixed technical signals and lingering global uncertainties. The latest regulatory developments in major markets and persistent seller dominance now reinforce downside risk, making the $74.19 long-term average a critical pivot for traders watching for either a sustained breakdown or a reversal.

Source of Data: XAG Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.