Silver Price Forecast: XAG/USD tumbles to near $36.30 despite escalating Middle East tensions

• Silver price falls sharply even though Middle East tensions have escalated.
• The US signaled the possibility of striking Iran in coming days.
• The Fed held interest rates steady in the range of 4.25%-4.50% on Wednesday.

Silver price (XAG/USD) is down almost 1% to near $36.25 during European trading hours on Thursday. The white metal faces a sharp selling pressure even though geopolitical tensions in the Middle East region have escalated after the United States (US) signaled that it is preparing to strike Iran.

Theoretically, heightened geopolitical tensions improve demand for safe-haven assets, such as Silver.

According to a Bloomberg report, senior US officials are preparing for the possibility of a strike on Iran in the coming days. Washington's assault on Iran would accelerate geopolitical uncertainty. Given that the US is the world's largest economy, its active involvement in a conflict with any nation would dampen the risk-appetite of investors significantly.

Meanwhile, some strength in the US Dollar (USD) is weighing on the Silver price. Technically, higher US Dollar makes the Silver price an expensive bet for investors.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, refreshes weekly high near 99.10.

The US Dollar gains on Middle East tensions and revised interest rate projections by the Federal Reserve (Fed) in its monetary policy announcement on Wednesday. As widely anticipated, the Fed left its key borrowing rates steady in the range of 4.25%-4.50% for the fourth straight meeting. The US central bank revised interest rate target for 2026 and 2027 lower to 3.4%, citing upside risks to inflation due to the fallout of the new trade policy by US President Donald Trump.

"Many companies expect to pass some or all of the tariff effect through to the consumer," Fed Chair Jerome Powell said during the press conference following the interest rate decision. Powell added that, "We've had goods inflation moving up a bit and expect to see more of that in summer."

Silver technical analysis

Silver price struggles to extend its upside after posting a fresh over-a-decade high near $37.32. However, the near-term trend of the white metal remains bullish as it holds the 20-day Exponential Moving Average (EMA), which trades around $35.40.

The 14-day Relative Strength Index (RSI) declines to near 60.00. A fresh bullish momentum would emerge if the RSI holds above that level.

Looking down, the October 22 low around $34.87 will act as key support zone. On the upside, the June 18 high of $37.32 will act as key hurdle.

Silver daily chart