On Wednesday (July 31st), spot silver surged over 2% due to dovish remarks from Federal Reserve Chairman Powell hitting the US dollar and further escalation of tensions in the Middle East. FXStreet analyst Christian Borjon Valencia recently wrote an article analyzing the technical trend of silver prices.

Valencia wrote that silver prices resumed an upward trend on Wednesday, soaring over 2% and breaking through the 100 day moving average (DMA) of $28.58 per ounce, which was once a key resistance level.

Spot silver closed up 2.15% on Wednesday, at $28.98 per ounce.

The Federal Reserve ended its two-day monetary policy meeting on Wednesday. The Federal Open Market Committee (FOMC) unanimously voted to keep the benchmark federal funds rate unchanged in the range of 5.25% to 5.5%, and reiterated its intention to lower rates once confidence in inflation cools down.

Federal Reserve Chairman Powell stated at a press conference that the second quarter inflation data has increased the Fed's confidence and made "some further progress" towards achieving its 2% inflation target. If the inflation test is met, the Fed may cut interest rates as early as September.

The ICE US dollar index closed down 0.4% on Wednesday at 104.06.

In terms of the situation in the Middle East, the New York Times reported on Wednesday that three Iranian officials have stated that Iran's Supreme Leader Ayatollah Ali Khamenei has ordered Iran to directly strike Israel in retaliation for the killing of Hamas leader Haniyeh in Tehran. Iran and Hamas accuse Israel of carrying out assassinations.

According to reports, three Iranian officials, including two members of the Revolutionary Guard Corps, said that Khamenei issued the order on Wednesday morning during an emergency meeting of Iran's Supreme National Security Council. Not long ago, Iran announced that Haniya had been killed.

How will the silver price go next?

Valencia wrote that the upward trend of silver is still playing a role, with the Relative Strength Index (RSI) showing an increasing bullish momentum, and the next targets include $29.44 per ounce and $30.00 per ounce.

As shown by RSI, buyers have gathered some momentum. Although the index is still below the neutral line, there has been a sharp rise, indicating that it will turn bullish and confirm the price trend.

Valencia stated that if silver prices remain above $29.00 per ounce, the next target will be the July 24th high of $29.44 per ounce, followed by the 50 day moving average (DMA) of $29.89 per ounce. Once the silver price breaks through $30.00 per ounce, it is expected to further rise.

Daily chart of spot silver

Valencia added that on the other hand, if the silver price falls below the 100 day moving average of $28.58 per ounce, the next support level will be the July 29 low of $27.31 per ounce, followed by $27.00 per ounce.