Spot silver (XAG/USD) experienced a notable decline during Thursday's European trading session, with prices falling to around 75.20. Earlier attempts to break above the 76.60 resistance area failed to sustain momentum, leading to renewed selling pressure. The primary driver for this pullback is the renewed rise in U.S. Treasury yields. The yield on the 10-year U.S. Treasury note rebounded to approximately 4.6% on Thursday, a significant increase from the previous session.
Although yields have retreated slightly from the multi-year high of 4.69% reached on Tuesday, they remain elevated, exerting sustained pressure on the precious metals market. The high-interest-rate environment is diminishing the market appeal of non-yielding assets like silver. Since silver itself does not generate fixed income, investors typically favor higher-yielding dollar assets when U.S. Treasury yields rise.
Previously, market concerns about Middle East energy supply disruptions were temporarily eased, leading to a notable correction in international oil prices on Wednesday and a brief cooling of U.S. Treasury yields. However, market worries about the Middle East situation have not completely disappeared. Risks to shipping through the Strait of Hormuz persist, and the global energy supply outlook remains uncertain. As rising energy prices could fuel U.S. inflation, the Federal Reserve's future policy path has become more hawkish.
Current market pricing suggests a significant shift in expectations regarding U.S. interest rates. Market bets on "higher for longer" interest rates have notably increased, which is a key reason for the recent strength in the U.S. dollar and Treasury yields.
From a macro perspective, the silver market is currently facing a "dual pressure": on one hand, persistently high U.S. Treasury yields continue to weigh on precious metals; on the other hand, the overall strength of the U.S. dollar is also undermining silver prices. However, the silver market is not entirely without support. As global geopolitical risks remain unresolved, and given silver's dual attributes as both an industrial metal and a safe-haven asset, some capital maintains an optimistic outlook for medium- to long-term silver demand.
Particularly against the backdrop of growing demand from new energy, solar photovoltaic, and electronics industries, silver's long-term industrial demand remains resilient. However, in terms of short-term capital flows, the market is currently clearly more focused on Federal Reserve policy and changes in U.S. yields.
Technically, silver prices have entered a phase of corrective structure. The daily chart shows the price currently trading below the 20-day Exponential Moving Average (EMA) at 77.84, having also broken below the support trendline of a previous ascending triangle pattern. The former trend support area has now turned into a new technical resistance zone around 78.31. The breach of the ascending triangle structure indicates that silver has entered a short-term correction phase. Meanwhile, the RSI indicator is currently around 46, in a neutral-to-weak zone, suggesting ongoing downward pressure but not yet in extreme oversold territory.
In terms of resistance structure, the first key resistance above is located in the 20-day EMA area at 77.84. If prices can reclaim and hold above this level, it could alleviate short-term downward pressure. A stronger resistance level lies near the May 15th high of 83.88. On the downside, the $70 psychological level has become the most critical support zone. If silver prices persistently fail to regain levels above the former ascending triangle trendline, a further test towards $70 is possible. A break below $70 could see the market test the March 26th low near 66.71.
On the 4-hour chart, silver maintains a short-term bearish structure. The MACD indicator is operating below the zero line, indicating that bearish momentum remains dominant. The RSI indicator continues to trade below 50, reflecting a cautious market sentiment. Furthermore, the short-term moving average system has formed a bearish alignment, suggesting the near-term trend remains biased to the downside. However, given the currently high market volatility, a rapid rebound in silver is possible if U.S. Treasury yields decline again or if the Middle East situation escalates suddenly.
In summary, the silver market is currently under sustained pressure from U.S. Treasury yields and hawkish Federal Reserve expectations. As markets reassess the potential for a prolonged period of high U.S. interest rates, the overall pressure on precious metals has increased significantly. Technically, after breaking below key trend support, silver has entered a short-term corrective phase. The market will closely watch whether the $78 area can be reclaimed and if the critical $70 support can hold. However, the Middle East situation, global energy risks, and industrial demand continue to provide medium- to long-term support for silver. Therefore, the current price action resembles a high-level consolidation rather than a complete long-term trend reversal. Overall, future silver price movements will remain highly dependent on U.S. dollar trends, changes in U.S. Treasury yields, and shifts in global risk sentiment.