Silver Price Forecasts: XAG/USD retreats below $85.00 as market sentiment sours

Silver (XAG/USD) accelerates its reversal in the early European session on Tuesday, trading at $84.80 at the time of writing, after rejection at two-month highs right above $87.00 earlier in the day. The pair has snapped a 4-day rally, weighed down by higher US Treasury yields and a stronger US Dollar, as market sentiment soured amid the deadlock in the US-Iran peace process.

The Greenback is drawing support from cautious market sentiment, and the US-Iran ceasefire teeters after Tehran rejected the latest US peace proposal, raising concerns about a resumption of hostilities. US President Donald Trump said on Tuesday that the ceasefire is on "life support," and the possibility of a resumption of hostilities starts to be seen as an option.

In the macroeconomic front, traders await April's US Consumer Price Index (CPI) release, which is expected to show that annual inflation accelerated to 3.7%, its highest level since September 2023. Core inflation is seen growing by a more moderate 2.7% yearly rate, from 2.6% in March, yet at levels significantly above the Federal Reserve’s (Fed) target rate. Investors are wary of a higher-than-expected inflation reading, which will strengthen the case for a hawkish turn in the Fed's forward guidance.

Technical Analysis: Silver is in a bearish correction

XAG/USD's technical picture shows the constructive bias still in place with technical indicators pulling back from heavily overbought levels after a sharp rally on Monday. The Relative Strength Index (RSI) has eased back toward the upper-mid range near 68, while the Moving Average Convergence Divergence (MACD) indicator remains in positive territory, hinting that bullish momentum is moderating but not yet exhausted.

Bears are likely to meet a strong support area between the April 17 high near $83.00 and the May 7 high, around 82.15. The trendline support from early May lows is now around $82.25. If these levels give way, the next target would be the May 11 low near $79.00.

On the topside, immediate resistance is seen at session highs, near $87.20. Further up, bulls would target the March 10 high in the $90.00 area.

(The technical analysis of this story was written with the help of an AI tool.)