Silver Steadies Near $87 as Geopolitical Risks, Soaring Oil Prices Cap Gains

Traders' Opinions

Summary:

Silver prices are attempting to find a footing in European trading on Thursday, hovering near $86.90 after paring recent losses.

BUY XAGUSD

Close Time

CLOSED

86.896

Entry Price

92.800

83.600

83.693 -0.131 -0.16%

329.6

Pips

Loss

83.600

83.598

Exit Price

86.896

Entry Price

92.800

The safe-haven calculus is proving to be a complicated one for silver investors. While the grey metal often benefits from geopolitical strife, the current landscape of escalating conflict in the Middle East is paradoxically creating its biggest headwind. XAG/USD is attempting to stabilize around $86.90 per troy ounce during the European session on Thursday, but the path of least resistance appears to be to the downside as the market digests a complex web of inflationary pressures and central bank policy implications.

The primary culprit restraining silver’s upside is the relentless surge in energy prices. West Texas Intermediate (WTI) crude is trading near $91.50, marking its third consecutive session of gains. This rally is being fueled by escalating fears of a broader regional war involving Iran, a threat that is overwhelming any market impact from coordinated strategic reserve releases by major economies. The International Energy Agency’s (IEA) agreement to unleash its largest-ever stockpile of 400 million barrels was largely dismissed by traders as an insufficient backstop against a potential major supply disruption. The stark reality of the geopolitical risk was hammered home on Thursday when Bahrain’s Interior Ministry reported that Iran had targeted fuel tanks at a facility in the Muharraq Governorate. This followed a declaration from Iran’s Islamic Revolutionary Guard Corps (IRGC) that it had launched a joint operation with Lebanon's Hezbollah against targets in Israel, Jordan, and Saudi Arabia.

This dramatic escalation is a critical development for the precious metals market. While gold often shines during such crises, the spike in oil prices acts as a double-edged sword for silver. It heightens short-term inflationary risks, which, in turn, solidifies the market’s conviction that the Federal Reserve will be in no hurry to cut interest rates. The logic is straightforward: higher energy costs filter through the economy, keeping price pressures elevated. This forces the Fed to maintain a tighter monetary policy stance for longer. As expectations for rate cuts are pushed further into the future, US Treasury bond yields climb. This raises the opportunity cost of holding non-yielding assets like silver, as investors can now get a more attractive return from bonds, thereby reducing investment demand for the metal.

This dynamic is being amplified by the strength of the US Dollar. The greenback remains firmly bid, buoyed by the dimming likelihood of imminent Fed easing and its own safe-haven appeal amidst the global turmoil. A stronger dollar makes silver, which is priced in USD, more expensive for buyers using other currencies, acting as a further drag on demand.

Adding another layer to the narrative was Wednesday’s release of the February US Consumer Price Index (CPI). The data showed inflation rising 0.3% month-over-month and 2.4% year-over-year, landing largely in line with market expectations. Core CPI, which strips out volatile food and energy, increased 0.2% MoM and 2.5% YoY. On the surface, these relatively steady figures provided a moment of calm, reducing fears of an imminent, unexpected surge in price pressures and reinforcing the "higher-for-longer" but not "tighter" narrative. However, analysts were quick to point out a significant caveat: this CPI report is a lagging indicator that does not yet fully capture the recent rocket-like ascent in oil prices triggered by the geopolitical events of the past week.

Therefore, the market is now looking ahead with heightened anxiety. The true test for the inflation and policy outlook will come with subsequent data. All eyes are now turning to Friday’s release of the US Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge. Investors will be parsing the PCE data for any early signs of the energy shock filtering into core prices. For now, silver remains trapped in a precarious position, caught between its traditional safe-haven allure and the stark reality of a rising dollar and a Fed that has been given yet another reason to keep rates steady.

Technical Analysis

From a technical perspective, Silver remains within a broader bullish market structure, though price action on the 4-hour chart is currently undergoing a corrective consolidation following a strong impulsive rally earlier in the month. The metal continues to respect a rising trendline originating from the mid-February lows, which has consistently provided dynamic support and maintained the sequence of higher lows that defines the prevailing uptrend.

Recent price action shows that silver rallied sharply toward the $90.00 resistance zone, which aligns with the 0.0% Fibonacci retracement level near $90.06 derived from the latest corrective swing. This area acted as a firm ceiling, prompting a pullback toward the $85.00–$86.00 support region, where buyers re-emerged. The pullback also tested key Fibonacci retracement levels, particularly the 50% retracement at $84.88 and the 61.8% level near $83.66, both of which sit just above the ascending trendline. The confluence of Fibonacci support and trendline structure has helped stabilize prices and triggered a rebound attempt.

The $85.00–$86.00 zone now represents a critical near-term support band. As long as silver continues to hold above this region and the rising trendline, the broader bullish structure remains intact. A decisive break below $83.65 (61.8% Fibonacci) would weaken this structure and likely trigger a deeper correction toward the $82.00 support area, which coincides with the 78% retracement near $81.98. A sustained move beneath that level would expose the $80.00 handle, marking a more meaningful deterioration in market sentiment and potentially shifting the broader structure into a medium-term consolidation phase.

On the upside, the immediate resistance sits around $88.00–$89.00, where the market recently encountered supply during the latest rally attempt. A sustained break above this region would confirm a bullish continuation pattern and re-open the path toward the $90.00 resistance level. A decisive push through $90.06 would represent a structural breakout and could accelerate bullish momentum toward the $92.80 area, which corresponds with the extended –27% Fibonacci projection, while a more aggressive continuation move could eventually target the $95.00–$96.00 region.

Momentum indicators reinforce the view that the current price action represents consolidation rather than trend exhaustion. The Relative Strength Index (RSI) has cooled from earlier overbought conditions and is stabilizing in the mid-range, suggesting that bullish momentum is resetting rather than reversing. Meanwhile, the Moving Average Convergence Divergence (MACD) is flattening near the neutral zone, indicating a pause in momentum while the market digests recent gains before attempting the next directional move.

TRADE RECOMMENDATION

BUY SILVER

ENTRY PRICE: 86.90

STOP LOSS: 83.60

TAKE PROFIT: 92.80

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Silver Steadies Near $87 as Geopolitical Risks, Soaring Oil Prices Cap Gains

Technical Analysis

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