Tensions escalate in the Middle East, Silver XAG/USD hits a record high approaching $69

Silver market surged strongly during Monday’s Asian session, with XAG/USD rising by 2.5%, approaching the $69.00 level and setting a new historical high. This upward wave was driven by renewed tensions in the Middle East, prompting investors to significantly shift into safe-haven assets, thereby boosting the value of traditional safe-haven commodities like silver.

Geopolitical Tensions Boost Safe-Haven Demand

According to NBC News, Israeli officials are closely monitoring Iran’s ballistic missile expansion plans, while Iran is also rebuilding nuclear facilities that were damaged earlier this year by Israeli military strikes. In this context, Israel is preparing assessment plans for a new round of military actions with U.S. President Trump.

Such escalating geopolitical risks directly stimulate investor demand for safe-haven assets like silver and gold. When markets are filled with uncertainty, traders naturally gravitate toward these precious metals viewed as “safe harbors.”

Fed Policy Expectations Remain Hawkish

From a monetary policy perspective, the market still expects the Federal Reserve to keep interest rates unchanged at the January policy meeting. Despite disappointing U.S. inflation data in November, this has not altered the Fed’s hawkish stance.

Specifically, November’s U.S. CPI year-over-year decreased from 3% in October to 2.7%, below economists’ expectations of 3.1%. Core CPI (excluding food and energy) fell from 3% to 2.6%. Even with weak inflation data, the Fed shows little enthusiasm for recent rate cuts, which keeps the dollar relatively strong and indirectly supports XAG/USD performance.

Technical Indicators Show Overheated Signals

XAG/USD traded near $69.02 at the start of the week, with the 20-period Exponential Moving Average (EMA) at $61.14, well below the current price, indicating an ongoing upward trend. The wide positive spread between price and EMA reflects the current strength but also exposes the risk of overextension.

The Relative Strength Index (RSI) is currently at 77.44 in overbought territory, suggesting short-term cooling pressure may emerge. The upward trendline starting at $49.96 provides support for the bullish outlook.

Regarding pullback risks, if XAG/USD falls back toward the 20-EMA around $61.14, the uptrend could still be maintained. However, a break below the $65 trendline would weaken the bulls’ control and could trigger a deeper correction toward the December 3 high near $59.00. An upward breakout requires surpassing the psychological resistance at $60.

(The above technical analysis was completed with the assistance of AI tools)

Basic Understanding of Silver Trading

As a precious metal, silver has traditionally been a tool for investors to diversify their portfolios. Compared to the dazzling aura of gold, silver has gained increasing attention due to its intrinsic value and anti-inflation properties. Investors can participate in the market by purchasing physical silver (such as coins and bars) or through exchange-traded funds (ETFs).

Multiple factors influencing silver prices:

Geopolitical turmoil or recession fears tend to enhance silver’s safe-haven appeal (though not as strongly as gold). As a non-yielding asset, low-interest-rate environments are generally favorable for silver. The dollar’s movement is also a key variable— a strong dollar suppresses XAG/USD, while a weakening dollar may push prices higher. Investment demand, mining supply (silver production far exceeds gold), and recycling rates are also important pricing factors.

Industrial demand as a driving force:

Silver is widely used in industry, especially in electronics and solar energy sectors, due to its superior electrical conductivity among metals. Economic trends in the U.S., China, and India directly impact industrial silver demand—China’s large industrial sector is a major consumer, and Indian consumers’ purchasing power for silver jewelry also plays a role in pricing.

Correlation with gold:

Silver prices often follow gold’s trajectory, as both are considered safe-haven assets. The gold-silver ratio (which reflects how many ounces of silver are equivalent to one ounce of gold) is a reference for relative valuation— a high ratio may indicate silver is undervalued or gold is overvalued, and vice versa.