Silver Price Analysis: XAG/USD pulls back sharply from multi-month highs above $25.50

• Spot silver hit its highest since last August above $25.50 but pulled back sharply to the $24.75 area.
• But as fighting in Ukraine intensifies and Western powers ready economic sanctions against Russia, silver may remain underpinned.

After hitting its highest level since August 2021 above the $25.50 per ounce mark earlier in the session as investors piled into safe-haven assets after Russia initiated war with Ukraine, spot silver (XAG/USD) have pulled back sharply. Prices are now back in the $24.75 region and retesting support in the form of earlier monthly highs, with on-the-day gains having been eroded to “just” 0.8% from more than 4.0% at earlier highs.

The pullback was not driven by any fundamental catalyst; indeed, the news coming out of Ukraine has remained grim throughout the day with non-stop fighting being reported across the country. Rather, sentiment took a slight turn for the better after the US open, with global equities bouncing a little from earlier lows. That seems to have triggered some quite aggressive profit-taking in spot silver. In the context of silver’s monthly performance (it is still over 10% higher in geopolitical tensions), Thursday’s pullback from highs is hardly catastrophic.

Ahead, as the fighting in Ukraine intensifies and investors remain uncertain about what sanctions Western nations will hit Russia with, and what economic impact these will have, geopolitical risk premia is set to remain elevated. That argues for ongoing support in precious metals markets, suggesting some traders might view Thursday’s US session pullback to the $24.70s as a dip-buying opportunity.