Silver Price Forecast: XAG/USD extends recovery above $74 amid optimism on Mideast ceasefire
- Silver price recovers further to near $73.00 as Mideast optimism caps oil price’s upside.
- Mideast optimism is boosted by Trump’s month-long ceasefire proposal and 15-point settlement plan.
- Traders might trim hawkish bets for global central banks if oil prices start normalizing.
Silver price (XAG/USD) extends its winning streak for the third trading day on Wednesday, trading over 2% around $73.00 during the European session. The white metal strengthens amid increased efforts from United States (US) President Donald Trump to end the war in the Middle East.
Earlier in the day, reports from Reuters showed that US President Trump seeks a month-long ceasefire with Iran and had sent a 15-point settlement plan, which involves Iran’s restriction to building nuclear weapons, and no uranium enrichment on Iranian territory.
US attempts to a ceasefire have increased hopes that shipment of energy from the Strait of Hormuz will be normalized soon, a scenario that will diminish supply risks, weigh on oil prices, and will eventually force traders to trim hawkish expectations for global central banks.
Theoretically, heightened geopolitical tensions improve the demand for safe-haven assets, such as Silver; however, it was underperforming in the past few weeks as surging energy prices forced traders to pare bets supporting interest rate cuts by global central banks for the entire year.
The scenario of higher interest rates by central banks or an extended pause bodes poorly for non-yielding assets, such as Silver.
Meanwhile, the US Dollar (USD) trades slightly higher as Iran continues to dismiss claims from President Donald Trump regarding its involvement in direct talks with the US.
Silver technical analysis
XAG/USD trades higher at around $73.10. However, the near-term bias is bearish as price holds well below the 20-day Exponential Moving Average (EMA) near $78.30, keeping the recent sequence of lower highs intact after the $93.80 peak.
The 14-day Relative Strength Index (RSI) recovers to near 41 after staying in the 20.00-40.00 range, signaling a pause in the downside momentum, but the downside bias remains intact.
Immediate support emerges at the recent $72.80 area, where a break would open the way toward the late-month trough near $67.90 as the next downside target. Below that, Monday's low of $64.01 would become relevant on extended weakness.
On the topside, initial resistance sits at $75.30, followed by the $79.30 region, which aligns with the declining 20-day EMA and strengthens its role as a critical barrier. A daily close above that cluster would be needed to neutralize the bearish tone and refocus attention on the $83.00 area.
(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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