Silver Technical Analysis: Recovery Stalls as Political Developments Trigger Price Pressure at XAG/USD

2026-01-06 13:42:39

Silver’s remarkable rally from near $74.00 has encountered significant headwinds following diplomatic developments in Ukraine. The precious metal initially surged to record highs around $86.00 but has since corrected sharply, currently trading around the $74.92 mark. This pullback coincides with comments from US President Trump regarding potential peace negotiations with Ukrainian President Zelenskyy, signaling reduced geopolitical risk and diminishing safe-haven demand for precious metals.

Geopolitical Backdrop: Mixed Signals for Silver Demand

The narrative around precious metals has shifted following late Sunday’s joint appearance by Trump and Zelenskyy, where optimism about resolving the Ukraine conflict was expressed, albeit with acknowledgment of remaining challenges. This reduced uncertainty typically pressures assets like Silver that benefit from crisis-driven buying.

However, the situation remains fluid. China has announced substantial military maneuvers near Taiwan, with reports confirming Chinese naval vessels operating in Taiwan’s territorial waters. Should this regional tension escalate, it could provide counter-support to Silver’s decline and reignite demand for defensive assets.

Technical Landscape: XAG/USD Testing Key Support Levels

On the 4-hour timeframe, Silver is approaching the 21-period Simple Moving Average positioned near $74.00, which is currently functioning as support and underscoring the underlying bullish structure. The Relative Strength Index has retreated to 54.79, no longer in overbought territory, while the MACD indicator has turned downward toward its centerline, indicating weakening buying pressure.

The technical setup suggests consolidation rather than capitulation. Should bearish momentum intensify, the $72.60 level—where Silver found resistance on December 24—represents the next floor. Beyond that, support consolidates between $69.60 and $70.20, where the 50-period SMA intersects with both the December 24 low and December 22 high.

On the upside, Silver faces psychological resistance at $80.00 before any attempt to revisit the fresh all-time high near $85.87 would need to overcome additional selling pressure.

The current consolidation reflects the interplay between receding geopolitical premiums and technical oversold conditions that could eventually fuel a rebound.

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