Silver Price Forecast: XAG/USD recovers major early losses, outlook remains uncertain
- Silver price recovers a majority of its early losses and rebounds to near $84.00.
- Higher US bond yields and the US Dollar are expected to remain a major drag on the Silver price.
- The Fed is unlikely to cut interest rates in the next three policy meetings.
Silver price (XAG/USD) claws back a majority of its early losses and recovers to near its opening price around $84.00 during the European trading session on Monday. The white metal is expected to remain under pressure as higher United States (US) Treasury yields due to strengthening market speculation that the Federal Reserve (Fed) will not cut interest rates in the near term have diminished the appeal of non-yielding assets, such as Silver.
10-year US Treasury yields are up almost 2% around 4.22% during the press time. Higher yields on interest-bearing assets diminish the appeal of non-yielding assets.
According to the CME FedWatch tool, traders expect the Fed to leave interest rates unchanged in the next three policy meetings in March, April, and June. For the July policy meeting, the odds of the Fed holding interest rates steady have increased to 46.7% from 39.3% seen on Friday.
Traders have pared significant dovish Fed bets amid surging oil prices, which have already prompted global consumer inflation expectations. Meanwhile, the US gasoline prices reached an average of $3.41 per gallon on Saturday, according to The New York Times (NYT).
In addition to receding dovish Fed expectations, rising US Dollar (USD) due to roaring oil prices and firm safe-haven trade amid the Middle East war has also weighed on the US Dollar.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.5% higher to near 99.35.
Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
Silver technical analysis
XAG/USD trades slightly lower at around $83.90 at the press time. The near-term bias is neutral as spot trades close to the 20-day Exponential Moving Average (EMA), which has flattened near $84.75. Price action has been oscillating around this average for several sessions, signaling a lack of directional conviction after April’s sharp reversal from above $110.
The 14-day Relative Strength Index (RSI) wobbles inside the 40.00-60.00 zone, signaling a lack of strong buying pressure and favoring a defensive tone.
Nearest resistance emerges in the recent swing area around $90.00, where prior rebounds stalled. A daily close above $90.00 would be needed to ease the current downside bias and reopen the way toward the mid-$90s. On the downside, initial support sits near the recent $82.00 low, with a break exposing the $78.00 region as the next key floor. A sustained move below $78.00 would confirm a deeper corrective phase toward the mid-$70s zone.
(The technical analysis of this story was written with the help of an AI tool.)
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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