Quick overview

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Silver saw a large sell-off due to traders’ worries that rising energy costs would hurt the global economy and reduce demand for the metal.

Brent oil rose above $77 as a result of the almost total cessation of oil flows across the Strait of Hormuz.

Ships avoid danger even though Iran hasn’t officially closed the crucial waterway in the midst of tensions. Natural gas prices in Europe skyrocketed as Iran attacked Qatar, the world’s largest LNG export facility. The country was forced to cease using the facility to produce LNG.

If the disruptions continue, natural gas prices will hit all-time highs, further taxing the global economy and potentially reducing demand for silver. ‘

Investors continue to strongly favor the US dollar as a highly liquid safe-haven currency. Silver and other commodities denominated in dollars are under more pressure as the US Dollar Index (DXY) rises 1.08 percent, trading at 98.70. A higher-than-anticipated ISM Manufacturing Purchasing Managers Index (PMI) supports the bullish momentum in the US dollar.

According to ISM, the Manufacturing PMI decreased marginally to 52.4 in February from 52.6 in January,  exceeded the market consensus of 51.8, and stayed well above the 50 threshold, indicating the sector’s continued growth.

Rekindled cost pressures in the production pipeline are indicated by the Prices Paid Index’s sharp increase from 59 to 70.5. Although it has improved to 48 points, the Employment Index is still in contractionary territory. Expectations that the Federal Reserve (Fed) will increase are strengthened by an increase in input prices.

Technical analysis 

The gold/silver ratio shot back above 60 as traders focused on geopolitical risks. If the gold/silver ratio gets close to recent highs near the 68 level, silver prices will be under more pressure. Right now, silver is trying to settle below $85.

XAG/USD is trading at $87 on the 4-hour chart. After the bulls failed to maintain the surge above $96.00 and the price fell back below the $92.00 support level, highlighting a loss of upside momentum, the near-term bias becomes slightly bearish. Before the 100-period Simple Moving Average (SMA) at $82.90, Spot is currently trading above the 50-period SMA at $86.90, which serves as the first support area.

This indicates a shift from a robust uptrend to a consolidation phase rather than a complete trend reversal. From overbought territory above 70, the Relative Strength Index (RSI) has moved back toward 44, indicating a reduction in buying pressure and bolstering the corrective tone.