Silver loses support amid Middle East ceasefire and economic uncertainty

Silver prices are recovering some of the losses seen in Monday morning's trading session. The main pressure on the metal came from the easing of geopolitical tensions in the Middle East. On Sunday, the parties to the conflict reached a ceasefire agreement. This put an end to the 15-month confrontation and temporarily reduced safe-haven demand for the precious metal.

Traders remain cautious today ahead of Donald Trump's inauguration. The new president's policies, including the possible introduction of trade tariffs, tax cuts and the deportation of illegal immigrants, could increase inflation. This in turn boosts interest in silver as a hedge.

Weak US inflation data released last week reinforced expectations of further interest rate cuts by the Federal Reserve (Fed). Lower interest rates make owning non-interest-bearing silver more attractive.

This week the market is awaiting key data releases, including US manufacturing reports, inflation figures and comments from the Fed. Traders should be prepared for increased volatility given silver's dual role as a monetary and industrial asset. A large proportion of industrial demand for the precious metal poses additional challenges, especially amid ongoing global economic uncertainty, which is dampening growth prospects.

From a technical point of view, silver prices on the daily timeframe (D1) have broken out of their bullish trend. A downward momentum was recorded last week. On the H4 timeframe, the precious metal is in the process of forming a second upward wave. However, the Relative Strength Index (standard parameters) indicates the likelihood of a reversal and the beginning of the third wave of the downward trend, which is supported by the divergence.

Signal:

Short-term prospects for silver suggest selling.

The target is at the level of 28.750.

Part of the profit should be taken near the level of 29.600.

A stop-loss could be placed at the level of 31.600.

The bearish trend is short-term, so trade volume should not exceed 2% of your balance.