Silver Price Forecast: XAG/USD lacks direction as RSI, ADX signal weak momentum
- Silver holds firm as the US Dollar eases, but rising Fed rate hike bets keep the metal on track for a weekly loss.
- XAG/USD remains stuck in a tight range as narrow Bollinger Bands point to subdued volatility.
- RSI stays near neutral, while weak ADX and a slightly negative MACD suggest limited directional momentum.
Silver (XAG/USD) holds firm on Friday, supported by a modest pullback in the US Dollar after its strong weekly rally. At the time of writing, Silver trades around $64.30 but remains on track for a weekly loss.
The softer US Dollar offers some relief, although the upside remains limited as markets raise bets on another Federal Reserve (Fed) rate hike after last week’s 25-basis-point (bps) increase. Higher borrowing costs weigh on non-yielding assets such as Silver and increase the appeal of interest-bearing assets. US Treasury yields climbed to fresh multi-year highs this week.
The CME FedWatch Tool shows around a 66% probability of another rate increase at the October meeting. Next week’s US Personal Consumption Expenditures (PCE) inflation report, ISM Manufacturing Purchasing Managers’ Index (PMI) and Nonfarm Payrolls (NFP) data could influence those expectations.
Despite the fundamental headwinds, Silver’s technical picture looks somewhat constructive. Momentum indicators are largely neutral, suggesting that neither buyers nor sellers are in firm control as XAG/USD continues to move within a range established over the past month.
Technical analysis
On the daily chart, Silver remains in a consolidation phase, with price moving between the contracted Bollinger Bands. The narrow band spread points to subdued volatility and suggests that a clearer directional move may require a breakout from the current range.
The Relative Strength Index (RSI) at 47 hovers around the midline, hinting at balanced momentum, while the Moving Average Convergence Divergence (MACD) stays slightly negative, suggesting modest downside pressure within an overall range as trend strength, per the Average Directional Index (ADX) at 10, remains weak.
On the topside, initial resistance is located at the Bollinger middle band near $65, followed by the upper band at $67, before more significant overhead supply emerges at the horizontal barriers of $70 and $75.
On the downside, immediate support is seen at the Bollinger lower band around $62, ahead of the horizontal floors at $60 and then $55, where buyers would be expected to reassert themselves if the current consolidation breaks lower.
(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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