- Silver prices traded subdued on Friday as a sharp rebound in risk appetite reduced safe-haven demand.
- Spot prices have remained subdued below $24.00 with the $24.50 level acting as a ceiling.
- As the war in Ukraine continues and the Western sanctions response to Russia evolves, uncertainty remains high.
An increase in risk appetite that has seen US stocks return to weekly highs and risk-sensitive currencies perform well is weighing heavily on safe-haven assets such as precious metals, US government bonds, the dollar and the yen. The hope that there might be an opportunity for Russian-Ukrainian diplomacy that could end the war just as it is starting is a factor fueling the better mood. The West’s “soft” sanctions response to Russia (so far) that has avoided hitting the country’s energy sector is another. As expected, silver prices (XAG/USD) they have struggled to make progress on the last trading day of the week, with the $24.50 level acting as a ceiling for price action.
At current levels around $24.10, silver prices are down around 0.5% on the day and almost 6.0% off Thursday’s highs above $25.50. Whether the wind continues to get out of silver’s recent geopolitical tension-fueled rally (XAG/USD still up over 7.0% on the month) will be up to the headlines. If talk of talks between Moscow and Kiev that could result in an early end to the war continues to gain traction, that could be a negative catalyst that pushes spot silver back below $24.00.
Alternatively, the push towards Western nations kicking Russia out of the SWIFT international payments system appears to be building, which could reignite some fears about economic disruption. If the momentum towards energy sanctions also increases, economic uncertainty and demand for inflation protection could easily lift XAG/USD above its 200-day moving average at $24.20 and above $24.50. Traders must remain vigilant. Depending on developments over the weekend, things could go either way quite aggressively next Monday.
Additional technical levels
Source: Fx Street
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