Silver Price Forecast: XAG/USD holds recovery near $57.60 amid weakness in US Dollar
- Silver price recovers to near $57.60 at the expense of the US Dollar.
- The US Dollar underperforms amid uncertainty ahead of US mid-term elections.
- The Fed is expected to leave interest rates unchanged in the policy meeting later this month.
Silver price (XAG/USD holds onto Thursday’s recovery near $57.60 during the European trading session on Friday. The white metal rebounds as the US Dollar (USD) is under pressure due to Artificial Intelligence (AI)-driven risk-off.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 101.90. The USD Index has corrected sharply in the past two days from its over-a-year high of 102.95 posted after the United States (US) Consumer Price Index (CPI) data release.
Technically, a lower US Dollar makes the Silver price an attractive risk-reward bet for investors.
USD rally questioned as Fed risks, earnings and politics weigh
Economists at DBS Group Research argue that the market reaction to the latest upside surprise in US CPI has exposed cracks in the Dollar’s recent advance. They note that the “USD’s failure to sustain gains following the upside CPI surprise raises questions about the durability of its rally,” with the initial move higher in the Dollar and US Treasury yields fading as investors reassessed the policy outlook.
According to DBS, “the reversal in Treasury yields and in Fed hike expectations suggests that investors are mindful of growth and earnings risks from further tightening,” underscoring a more cautious stance toward additional rate increases. At the same time, “political uncertainty added to the headwinds.” With US midterms approaching, DBS highlights that “investors are questioning whether the benign assumption that Republicans would lose the House but retain the Senate is correct,” as the electoral landscape appears less predictable.
DBS points out that “prediction markets now see a growing risk of a Democratic sweep of Congress, raising concerns about tighter regulatory scrutiny, policy gridlock, and the sustainability of elevated equity valuation.” In their view, this combination of policy, growth and political risks is increasingly challenging the narrative of a straightforward, durable USD rally.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $57.53, maintaining a bearish near-term bias as spot holds clearly below the 20-day exponential moving average (EMA) at $60.49. The downside break beneath this key trend gauge suggests the recent pullback is evolving into a deeper correction, while the Relative Strength Index (14) around 38 hints at persistent but not yet extreme selling pressure.
On the topside, immediate resistance is defined by the 20-day EMA at $60.49, which would need to be reclaimed to ease the current bearish tone and open the way for a more sustained recovery. As long as price remains under this barrier, momentum readings near oversold territory reinforce the risk of continued consolidation or further weakness rather than a decisive rebound.
(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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