Silver prices have extended their recent decline, falling to their lowest level since late March as global economic concerns and geopolitical tensions weigh on the metal. The white metal is now approaching a technical death cross pattern, a bearish signal, just ahead of key US inflation data due this week.
Geopolitical and Economic Pressures Mount
The recent sell-off in silver has been driven by a combination of factors, including escalating tensions in the Middle East. Reports of a US military aircraft being downed by Iran, followed by retaliatory strikes, have heightened fears of a broader conflict. Meanwhile, ongoing hostilities between Israel and Hezbollah continue to destabilize the region. These developments are seen as potentially disruptive to global economic growth, which in turn dampens demand for industrial metals like silver.
Silver occupies a unique position as both an industrial and a precious metal, making it sensitive to shifts in economic outlook and safe-haven demand. The current environment of uncertainty has led investors to reassess their positions, contributing to the metal's sharp decline from its year-to-date high of $121 to the current level around $64.
US Inflation Data in Focus
The next major catalyst for silver prices will be the release of US consumer and producer price index (CPI and PPI) data on Wednesday and Thursday. Economists surveyed by Reuters expect the headline CPI to have risen to 4.2% year-over-year in May, while the PPI is forecast to accelerate to 6.4% from 6% in April. Such readings would indicate persistent inflationary pressures, potentially reinforcing the Federal Reserve's hawkish stance.
If inflation proves stickier than anticipated, the Fed may maintain its current interest rate range of 3.50% to 3.75% and signal a willingness to hike further. This would contrast with political pressure from President Trump, who has called for rate cuts despite rising prices. Higher interest rates typically increase the opportunity cost of holding non-yielding assets like silver, adding further headwinds to the metal.
Technical Analysis: Death Cross Approaches
From a technical perspective, silver's outlook has turned bearish. The daily chart shows the price has broken below an ascending trendline that had been in place since March, confirming a shift in momentum. More notably, the 50-day moving average is on the verge of crossing below the 200-day moving average, forming a death cross pattern—a widely watched bearish signal.
With the death cross imminent, the next key support level is at $60. A decisive break below that could open the door to further declines, potentially toward the $50 area. Conversely, a rebound above the broken trendline would be needed to negate the bearish setup.
For context, other commodities are also under pressure. Citi recently lowered its 3-month gold forecast to $4,000, citing weakening safe-haven demand. Meanwhile, silver's tumble to a two-month low has been exacerbated by rising bond yields and hawkish Fed bets.
Investors will be closely watching the inflation data for clues on the Fed's next move, which could determine whether silver finds support or continues its descent.
This article is for informational purposes only and does not constitute financial advice.
