• Silver price drops sharply to near $29.60 as US bond yields rise on expectations that the Fed will follow gradual rate-cut cycle in 2025.
• Heightened geopolitical tensions in Middle East failed to uplift the Silver price.
• The outlook of the Silver price has weakened amid a breakdown of the upward-sloping trendline around $30.00.

Silver price (XAG/USD) falls to near $29.60 in a thin trading volume session following holidays on Christmas and Boxing Day on Friday. The white metal is under pressure even though tensions in the Middle East region between Israel and Iran have escalated.

On Thursday, Israel launched missiles at the Iran-backed Houthis military and bombed Yemini airport. After the air assault, Israeli Prime Minister Benjamin Netanyahu said in an interview with an Israeli TV station of the Houthis, “We are just getting started with them”. Israel retaliated to last week’s air assault by Iran.

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

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, oscillates in a tight range above the key support of 108.00. 10-year US Treasury yields rise to near 4.61%. Higher yields on interest-bearing assets elevate the opportunity cost of non-yielding assets, making them an expensive bet for investors.

US bond yields remain firm on expectations that the Federal Reserve (Fed) will deliver fewer interest rate cuts in 2025. The Fed is expected to slow down the policy-easing cycle amid confidence in the United States (US) economic outlook.
 

Silver technical analysis

Silver price stays below the upward-sloping trendline, plotted from the February 29 low of $22.30 on a daily timeframe, after a breakdown near $30.00. The white metal wobbles around the 200-day Exponential Moving Average (EMA), suggesting that the longer-term outlook is uncertain.

The 14-day Relative Strength Index (RSI) rebounds to near 40.00. A fresh bearish momentum would trigger if it fails to break above that level.

Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the 50-day EMA around $30.90 would be the barrier.

Silver daily chart

(Click on image to enlarge)

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