Prediction for Silver Price: XAG/USD falls below $21.60 as USD Index recovers amid global worries

During the Tokyo session, the silver price (XAG/USD) experienced a sharp decline to close to $21.55. The white metal fell like a house of cards as geopolitical tensions intensified the theme of risk aversion. Silver price is predicted to continue its downside momentum as the fears of a comeback in the United States inflation have joined the US-China tensions.

The US Dollar Index (DXY) has rallied firmly to approximately 103.70 as the geopolitical tensions-inspired volatility has driven investors to hide behind safe-haven assets. The mood on the market has been dimmed by the US ambassador to China's warnings if Beijing chose to provide lethal military aid to Russia for its invasion of Ukraine. Additionally, three rockets from North Korea on Japan’s Exclusive Economic Zone (EEZ) have poured fuel to the fire.

S&P500 futures have extended their losses as the resurgence of inflation fears in the United States has raised warning flags for the upcoming economic recovery. The Federal Reserve (Fed) might continue rising interest rates after a comeback in the prices of goods and services at the factory gates and a revival in consumer spending, expressed by positive Retail Sales statistics. Monday will be a holiday in the United States, so the financial markets will be closed.

Thursday's Gross Domestic Product (GDP) report will be closely scrutinized by investors for more advice. It is anticipated that the preliminary annualized GDP for the fourth quarter would remain unchanged at 2.9%.