• Silver price falls toward $87.90 on Monday, down 6.33%, reversing earlier gains.
• The US Dollar rises, supported by a stronger-than-expected ISM Manufacturing PMI.
• US Dollar strength and renewed inflation expectations weigh on precious metals despite ongoing geopolitical tensions.

Silver (XAG/USD) drops toward $87.90 at the time of writing on Monday, losing 6.33% on the day and sharply reversing the gains recorded earlier in the day. After initially benefiting from strong safe-haven demand amid war in the Middle East, the white metal now faces significant selling pressure, mainly driven by the renewed strength of the US Dollar (USD).

The Greenback remains firmly bid against the backdrop of the war in the Middle East, as investors favor the US Dollar as a highly liquid safe-haven currency. The US Dollar Index (DXY) gains 1.08%, trading around 98.70, increasing pressure on Dollar-denominated commodities, including Silver.

The bullish momentum in the Greenback is reinforced by a stronger-than-expected ISM Manufacturing Purchasing Managers Index (PMI). ISM reported that Manufacturing PMI edged down slightly to 52.4 in February from 52.6 in January, but it beat the market consensus of 51.8 and remained well above the 50 threshold, signaling continued expansion in the sector.

The report’s components further support the US Dollar. The Prices Paid Index jumped sharply to 70.5 from 59, pointing to renewed cost pressures in the production pipeline. Meanwhile, the Employment Index improved to 48.8 but remains in contraction territory. The strong rise in input prices reinforces expectations that the Federal Reserve (Fed) will adopt a cautious stance before considering any near-term rate cuts.

The ISM release, therefore, acts as a catalyst, reinforcing an already bullish trend in the US Dollar. The rebound in real yields and the market’s repositioning toward a more restrictive monetary policy scenario also mechanically weigh on non-yielding assets such as Silver.

Despite persistent geopolitical tensions in the Middle East, which continue to fuel some degree of risk aversion, the current market dynamic is dominated by US Dollar strength.

Silver Technical Analysis

In the 4-hour chart, XAG/USD trades at $87.95. The near-term bias turns mildly bearish after bulls failed to sustain the spike above $96.00 and price slid back below the $92.00 support level, underscoring a loss of upside momentum. Spot now trades above the 50-period Simple Moving Average (SMA) around $86.90, acting as the first support area, before the 100-period SMA near $82.90, reflecting a transition from a strong uptrend to a consolidation phase rather than a full trend reversal. The Relative Strength Index (RSI) has retreated toward 44 from overbought territory above 70, signaling easing buying pressure and supporting the corrective tone.

Initial resistance emerges at the recent rebound high around $94.50 and the peak just above $96.00. A recovery through these levels would reopen the path toward the prior impulse top and weaken the current pullback narrative. On the downside, a break below $86.90 would expose the next support band toward $82.90, before $81.50, where lies a rising trend structure, and a failure there would strengthen the bearish bias for the 4-hour outlook.

(The technical analysis of this story was written with the help of an AI tool.)