Silver vulnerable to more losses as US-Iran talks dominate focus

FUNDAMENTAL OVERVIEW

Silver faced significant selling pressure on Tuesday after Trump turned down an Iranian proposal to reopen the Strait of Hormuz. The US president also indicated he anticipates renewed American airstrikes on Iran after the midterm elections.

The initial outlook seemed increasingly bearish, though sentiment saw some improvement during American trading hours as a string of reports suggested potential US compromises.

Axios reported that Trump has allegedly extended offers of sanctions relief and access to frozen assets to Iran in return for advancement on its nuclear program, though the US president later denied those claims.

Trump did confirm that American and Iranian officials are communicating through intermediaries. Meanwhile, Iranian Foreign Minister Araghchi stated he anticipates Tehran receiving a formal answer to its Strait of Hormuz proposal later today.

Attention will thus stay fixed on US-Iran developments. A diplomatic resolution could lift silver as prospects for aggressive Federal Reserve rate hikes would probably diminish. A negative development would likely sustain downward pressure on the metal.

SILVER TECHNICAL ANALYSIS – DAILY TIMEFRAME

Looking at the daily chart, silver dropped below the key 63.00 support level following Trump's rejection of Iran's proposal. All else held equal, the natural downside target stands at the 55.00 mark. If the price retests the former support now acting as resistance, sellers are likely to step in at that level with a clear risk above it, continuing to aim for 55.00. Buyers, by contrast, will seek a breakout to the upside to prolong the pullback toward the downward trendline.

SILVER TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4-hour chart, a minor downward trendline defines the bearish momentum. Should a pullback occur, sellers are expected to use the trendline as a selling zone with a defined risk above it to drive prices to fresh lows. Buyers will seek a move higher to extend the pullback toward the 63.00 resistance area.

SILVER TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

The 1-hour chart offers little additional information but clearly shows that the intense bearish momentum has subsided for now. A break above the 61.00 level could encourage buyers to position for a pullback toward the 4-hour trendline. Sellers will then look for a counter-trendline and wait for a breakdown to initiate fresh short positions targeting new lows. The red lines mark today's average daily range.

UPCOMING CATALYSTS

Tuesday brings the US Consumer Confidence report and Job Openings data. Wednesday features the ADP employment report and the PCE price index. Thursday sees the ISM Manufacturing PMI and weekly Jobless Claims. Friday closes the week with the NFP report. However, the main focus will stay on US-Iran developments.