XAG/USD: Silver prices may drop below $30.00 as safe-haven demand temporarily weakens
Silver may drop below $30.00
The strengthening dollar and easing geopolitical tensions have reignited bearish prospects for silver.
On November 26, silver traded above the psychological support level of $30.00 but may retreat as the market responds to signals of dollar strength and a temporary decline in safe-haven demand following progress in talks between Israel and Lebanon.
According to Al Jazeera, Israeli Ambassador to the U.S., Mike Herzog, stated on Israel’s army radio that a ceasefire agreement to end hostilities between Israel and Hezbollah militants in Lebanon could be reached “within days.”
This development has slightly calmed markets previously rattled by the escalation of the Ukraine war and the deployment of advanced weaponry. As of writing, silver was trading below $30.42.
Price dynamics of XAG/USD since November 2023
On Tuesday, markets were also focused on Donald Trump’s announcement of potential 25% import tariffs on major U.S. trade partners, including Canada and Mexico, and an additional 10% hike on the already mentioned 60% for China.
Additionally, business circles were analyzing the recently released minutes from the Federal Open Market Committee (FOMC) meeting on November 7, where interest rates were reduced by 25 basis points to 4.50%-4.75%.
FOMC officials expressed diverging views on further rate cuts: some advocated pausing rate reductions if inflation remains high, while others called for an accelerated pace if the economy weakens. However, the FOMC members agreed not to provide clear signals about future policy directions, instead emphasizing the need to monitor economic trends amid volatile data.
Technical perspectives
The combination of dollar strength and easing geopolitical tensions continues to weigh on silver’s outlook.
If the horizontal support from the May 21 high at $32.50 is broken, silver is expected to retreat to the November 14 low around $29.70—unless renewed military threats restore confidence in safe-haven assets.
Silver prices have entered a challenging phase dipping over 12% within the past four weeks, double gold’s 9% drop. Monday’s 4% decline pushed silver to a six-day low of $30.00, breaking key support levels.
