Silver slumps to $29.60 despite Mideast tensions

The price of silver fell to near $29.60 in a thin trading volume session on Friday following a shorter trading week because of the Christmas and Boxing Day holidays.

The white metal XAGUSD is under pressure even though tensions in the Middle East region between Israel and Iran have escalated.

On Thursday, Israel launched missiles at the Iran-backed Houthis military and bombed Yemen’s airport. After the air assault, Prime Minister Benjamin Netanyahu said in an interview with an Israeli TV station of the Houthis, “We are just getting started with them”, as Israel retaliated to last week’s air assault by Iran.

Historically, heightened geopolitical tensions improve the demand for safe-haven assets, such as silver.

Meanwhile, the DXY Dollar Index, which tracks the greenback’s value against six major currencies, oscillated in a tight range above the key support of 108.00. 10-year US Treasury yields rose to near 4.61%. Higher yields on interest-bearing assets elevate the opportunity cost of non-yielding assets, making them an expensive bet for investors.

US bond yields remain firm on expectations that the Federal Reserve will deliver fewer interest rate cuts in 2025. The Fed is expected to slow down the policy-easing cycle amid confidence in the US economic outlook.

Silver technical analysis:

Silver remains below the upward-sloping trendline, plotted from the February 29 low of $22.30 on a daily timeframe, after a breakdown near $30.00.

Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the 50-day EMA around $30.90 would be the barrier.