• Silver price slumps to near $72.30 in Thursday’s early European session. 
• The US military carries out new strikes in Iran, weighing on the Silver price. 
• The negative outlook of white metal prevails below the 100-day EMA, with bearish RSI momentum. 
• The first upside barrier is located at $77.95; the initial support level to watch is 71.22.  

Silver price (XAG/USD) tumbles to around $72.30, the lowest since May 6, during the early European trading hours on Thursday. The precious metal faces some selling pressure amid renewed tensions between the US and Iran. 

Reuters on Wednesday reported that the US military carried out new strikes overnight in Iran targeting ‌a military site and shooting down four Iranian one-way attack drones that posed a threat around the Strait of Hormuz. Rising tensions in the Middle East have driven up crude oil prices and strengthened the US Dollar, weighing on the USD-denominated commodity price. 

All eyes will be on the release of the US PCE inflation data later in the day. This report might offer some clues about the US interest rate path this year. The headline PCE Price Index is expected to show a rise of 3.8% YoY in April, compared to 3.5% in March. Meanwhile, the core PCE Price Index is projected to show an increase of 3.3% YoY in April, versus 3.2% prior.

The release of the US Personal Consumption Expenditures (PCE) Price Index data for April will be the highlight later on Thursday. If the report shows hotter-than-expected outcomes, this could reinforce the expectation of the interest rate hike from the US Federal Reserve (Fed) this year and undermine the white metal.

Technical Analysis:

In the daily chart, XAG/USD holds well below the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day SMA near, keeping the near-term bias bearish despite the recent bounce off lower levels. The Relative Strength Index (RSI) at 41.76 sits below the neutral 50 line, hinting at lingering downside pressure rather than a decisive recovery.

On the topside, initial resistance emerges at the Bollinger 20-day SMA around $77.95, followed by the May 25 high of $78.83. The next hurdle to watch is the 100-day SMA at $81.30, with the upper Bollinger band near $86.86 acting as a more distant cap if a short-covering rally extends. 

On the downside, the next notable cushion is the low of April 30 of 71.22, followed by the 70.00 psychological level. The next contention level is seen at the lower Bollinger band at roughly $69.00, where a break would expose further weakness toward lower, uncharted support zones on the daily scale.

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