Silver Price Forecast: Descending channel keeps sellers in control
- Silver holds modest gains as the US Dollar and Treasury yields stabilise following last week's decline.
- The technical outlook remains bearish as XAG/USD trades within a descending channel below key daily SMAs.
- The $55 level provides key support, while $60 acts as immediate resistance.
Silver (XAG/USD) kicks off the week on a bullish note but struggles to extend its gains as the US Dollar (USD) and US Treasury yields pause their decline following last week’s correction from recent highs. Expectations that the Federal Reserve (Fed) could deliver another interest rate hike before year-end also contain the upside for the non-yielding metal. At the time of writing, XAG/USD trades around $57.65, up nearly 1.15% on the day.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.95 after falling to 101.58 last week. Meanwhile, the benchmark 10-year US Treasury yield stands near 5.09%, recovering from Thursday’s low of 5.03%.
Technical analysis
From a technical perspective, Silver maintains a bearish structure within a descending parallel channel, forming a series of lower highs and lower lows since peaking near $71 in late August. The metal also trades below its key daily Simple Moving Averages (SMAs).
Momentum indicators remain bearish. The Relative Strength Index (RSI) near 39 and a negative Moving Average Convergence Divergence (MACD) reading reinforce prevailing downside pressure within a strengthening trend backdrop indicated by the Average Directional Index (ADX) above 26.
On the downside, the $55 psychological mark provides strong initial support, as buyers previously stepped in around this level. This area also aligns with the lower boundary of the descending channel. A decisive break below $55 could expose the $50 psychological level.
On the topside, initial resistance appears at the $60 psychological mark, followed by the 100-day SMA at $62.88 and the 50-day SMA at $63.80. Further gains could open the door toward the $68-$70 resistance zone, while the 200-day SMA near $72.08 remains the main longer-term barrier.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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