Silver (XAG\/USD) fell almost 2.3% to about $76.00 in European trading on Thursday. Selling pressure came as oil extended gains for a third day.<\/p>\n
WTI rose to around $95.80, the highest in a week, while the Strait of Hormuz stayed closed. The route carries almost 20% of global energy supply, and remains shut despite a ceasefire extension between the US and Iran.<\/p>\n
Iran said Hormuz will stay closed until the US lifts a blockade on Iranian sea ports. The move has frozen Iranian business activity.<\/p>\n
Higher oil prices have raised global inflation expectations, which can reduce the scope for interest-rate cuts. This tends to weaken demand for non-yielding assets such as silver.<\/p>\n
The US Dollar also strengthened on expectations the Federal Reserve will not cut rates this year. CME FedWatch puts the chance of rates staying at 3.50%\u20133.75% in December at 76.8%, and the DXY hit a weekly high near 98.70.<\/p>\n
XAG\/USD traded near $76, with the 20-day EMA at $76.84 acting as resistance. RSI was 47.85, while resistance sits around $83.00 and support levels are $72.60 and $68.28, with $90.00 as another upside level.<\/p>\n
With oil prices firming up near $95.80 due to the ongoing closure of the Strait of Hormuz, we see inflationary pressures mounting. This strengthens the Federal Reserve’s case to hold interest rates steady, which is a significant headwind for a non-yielding asset like silver. The strong US Dollar, with the DXY hitting 98.70, further dampens silver’s appeal.<\/p>\n
Given the technical weakness and the bearish macro backdrop, we should consider buying put options on silver. The price is currently struggling below the 20-day EMA, and a breakdown of the ascending triangle pattern could see a swift move towards the $72.60 support level. This provides a clear target for near-term bearish trades with defined risk.<\/p>\n
This market dynamic is reminiscent of the environment we saw back in 2023, when the Fed aggressively hiked its policy rate to a peak of 5.5% to combat inflation. During that period, sustained US dollar strength and high interest rates placed a firm cap on precious metal prices for extended periods. The current market expectation of rates holding at 3.50%-3.75% suggests this historical pressure is re-emerging.<\/p>\n
Alternatively, selling call credit spreads with strike prices safely above the key $83.00 resistance level could be a prudent strategy. This allows us to collect premium from the market’s fear of a breakout while the current downward pressure persists. We must be prepared to close these positions if a diplomatic resolution in the Strait of Hormuz suddenly emerges, as that would likely cause oil prices to fall and silver to rally.<\/p>\n
For now, the trade is directly tied to energy prices and Fed expectations. The fact that the Strait of Hormuz is responsible for the transit of nearly 20% of global oil supplies means this is not a minor disruption. As long as this chokepoint remains closed, we expect oil to remain elevated, the dollar to stay strong, and silver to stay vulnerable to further downside.<\/p>\n","protected":false},"excerpt":{"rendered":"
Silver drops 2.3% near $76 as oil surges, Hormuz stays closed, boosting dollar and rate-hold expectations.<\/p>\n","protected":false},"author":87,"featured_media":0,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-45451","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t