Silver Price Forecast: XAG/USD holds onto recovery move around $74, outlook remains grim
- Silver price bounces back strongly to near $74.00; however, its outlook remains grim.
- Thursday’s sell-off in the US Dollar offered support to the Silver price.
- Fears of policy divergence between the Fed and other global central banks have diminished.
Silver price (XAG/USD) holds onto Thursday’s recovery move around $74 during the Asian trading session on Friday. The white metal recovered the previous day after revisiting the February low around $64.00.
The Silver price attracted significant bids after a sharp decline in the US Dollar (USD), which was driven by diminished fears of policy divergence between the Federal Reserve (Fed) and other global central banks.
Technically, a lower US Dollar makes the Silver price an attractive risk-reward trade for investors.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declined over 1% to near 99.00 on Thursday, but has risen slightly to near 99.35.
Comments from global central banks such as the Bank of Japan (BoJ), the Bank of England (BoE), and the European Central Bank (ECB) signaled that they are unlikely to ease their monetary policy conditions amid de-anchoring inflation expectations across the globe due to higher oil prices.
On Wednesday, the US Dollar rallied after the Federal Reserve’s (Fed) monetary policy outcome, in which Chairman Jerome Powell signaled that interest rate cuts are not feasible unless inflation resumes progress towards the central bank’s 2% target.
However, the scenario of an extended pause or tight monetary conditions by global central bankers is theoretically an unfavorable scenario for non-yielding assets, such as Silver.
Meanwhile, conflicts in the Middle East, which involve the US, Israel, and Iran, are expected to continue limiting the downside in safe-haven assets, such as Silver. Investors tend to shift to the safe-haven fleet in a heightened geopolitical environment.
Silver technical analysis
XAG/USD trades slightly higher at around $74. However, the near-term bias is bearish as price extends its decline below the 20-day Exponential Moving Average (EMA), which now tracks above spot and acts as dynamic resistance near $81.30. The sequence of lower closes from the mid-$90s to the low-$70s underscores persistent selling pressure, while the RSI slipping below 40.00 for the first time in 11 months is confirming downside momentum without reaching oversold territory. This setup keeps sellers in control unless the price can recover and stabilize back above the broken average.
Immediate resistance appears at $76.50, where a prior reaction high aligns with the descending short-term structure, followed by a stronger barrier around $81.00, capped by the 20-day exponential moving average. A sustained break above $81.00 would weaken the current bearish tone and open a move toward the $84.00 area. On the downside, initial support is located at round-level $70, followed by Thursday's low of $65.51.
(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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