Silver Price Analysis: XAG/USD soars to near $23 as Middle East tensions mount

Silver price (XAG/USD) jumps to near $23 as deepening geopolitical tensions improve appeal for bullions. The white metal witnesses significant buying interest as volatility expands due to deepening Middle East crises.

Geopolitical tensions heightened after three US service members were killed, stationed in northeastern Jordan by an aerial drone attack. Meanwhile, continuous attacks on commercial shipments through Red Sea have kept broader markets on their toes.

However, White House National Economic Council director Lael Brainard said last week that Iran-backed Houthi’s attacks on ships in the Red Sea appear to have less impact on their supply chain against other economies.

This week, market participants will focus on the first interest rate decision of 2024 by the Federal Reserve (Fed), which will be announced on Wednesday. The Fed is expected to keep interest rates unchanged in the range of 5.25-5.50% for the fourth straight time.

Investors would keenly focus on whether Fed policymakers would soften their tone for the “restrictive interest rates” narrative amid moderate increase in core Personal Consumption Expenditure (PCE) price index data for December, released last week.

Silver technical analysis

Silver price aims to deliver a breakout of the consolidation formed in a range of $22.60-23.00 on a two-hour timeframe. The white metal may extend its upside journey towards the horizontal resistance placed from January 5 high around $23.52. The 50-period Exponential Moving Average (EMA) near $22.75 continues to provide support to the Silver price bulls.

The 14-period Relative Strength Index (RSI) attempts to climb above 60.0. If the RSI (14) manages to sustain above the same, a bullish momentum would get triggered.

Silver two-hour chart