Silver Price Forecast: XAG/USD rises to near $64.00 as oil prices decline

• Silver rises as lower oil prices soften inflation fears, offering underlying support to non-yielding precious metals.
• Drone attacks damaged Saudi Arabia's East-West pipeline, though partial recovery is expected within days.
• Headwinds persist as the Federal Reserve raised interest rates by 25 basis points and signaled further hikes.

Silver price (XAG/USD) gains ground after posting losses the previous day, trading around $63.80 per troy ounce during the Asian hours on Thursday. The white metal finds support as oil prices retreated amid easing concerns over supply disruptions and inflation.

The pullback in crude prices followed reports that Saudi Arabia plans to restore roughly half the capacity of its East-West pipeline within days and return to full operation within six weeks. The key pipeline, which offers an alternative export route bypassing the vulnerable Strait of Hormuz, was damaged in drone attacks last week. In the interim, Saudi Arabia has ramped up efforts to transport larger crude volumes through the strait with assistance from the US military.

Silver may face ongoing headwinds as the US Federal Reserve raised interest rates and signaled another hike before the end of the year. The Fed increased the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%, as expected, marking its first interest rate increase in three years and raising the opportunity cost of holding non-yielding precious metals.

Fed Chair Kevin Warsh said that the move was because "inflation is too high and has been for too long", adding that it was a "sober" and "responsible decision.” Warsh signaled the rate could be increased further in a bid to slow rising prices. Money markets priced in about a 49.8% chance of a Fed hike in October, according to the CME FedWatch tool.

Technical Analysis:

In the daily chart, XAG/USD trades at $63.80, with a bearish near-term bias as price holds below both the nine- and 50-period Exponential Moving Averages (EMAs). The alignment of short- and medium-term EMAs above spot hints that recent rebounds are being capped, while the 14-day Relative Strength Index (RSI) easing to 47.3 reinforces a consolidative-to-soft tone rather than outright oversold conditions.

On the topside, immediate resistance is seen at the nine-period EMA at $64.36, followed by the 50-period EMA at $64.70, where a sustained break would be needed to reopen a stronger bullish phase. On the downside, momentum support is located around the RSI reading near 47, where a deeper slide in price coupled with a drop in RSI toward 40 would likely signal intensifying bearish pressure for silver.

(The technical analysis of this story was written with the help of an AI tool. Know more.)