XAG/USD Surges, Safe-Haven Sentiment Returns
Silver prices (XAG/USD) surged to around $87.60 during Wednesday's Asian session, continuing their rebound after experiencing a sharp correction last week. This increase occurred as "buy the dip" buyers returned, capitalizing on prices perceived as undervalued following the extreme decline.
Safe-haven sentiment also strengthened following reports that the United States military shot down an Iranian drone that was reportedly approaching a US aircraft carrier in the Arabian Sea. Geopolitical concerns such as these typically drive capital flows into defensive assets such as precious metals—including silver.
However, silver's upside potential could be limited by US monetary policy. Donald Trump nominated Kevin Warsh to replace Jerome Powell as the next Federal Reserve Chair. The market believes this leadership change could reinforce the narrative of higher interest rates for longer to curb inflation—which tends to strengthen the dollar and put pressure on dollar-denominated commodities.
From a market technical perspective, the previous sharp correction in precious metals was also exacerbated by changes in margin rules. CME Group increased margin requirements for gold and silver, forcing traders using leverage to sell positions to cover their funding needs. After this wave of forced selling subsided, the market began to breathe, and silver had room to rebound.
Looking ahead, attention will be focused on the US-Iran diplomatic trajectory and the tone of statements from both sides. Iran has requested that this week's negotiations be held in Oman rather than Turkey, and has limited discussions to the nuclear issue. Meanwhile, Trump has warned that the situation could worsen if a deal fails—keeping the market on edge, and silver likely to remain sensitive to geopolitical headlines. (asd)
Source: Newsmaker.id
