Silver Price Forecast: XAG/USD recovers some losses, upbeat US Dollar caps upside
- Silver recoups some of losses after hitting a fresh YTD low near $52.67.
- Upbeat US Dollar is keeping the Silver price under pressure.
- Investors await the Fed’s policy, flash Q3 GDP and PCE Price Index data for September.
Silver price (XAG/USD) claws back some of its losses after posting a fresh Year-Till-Date (YTD) low near $52.67. Still, the white metal is 1% down to near $53.45 in the European trade on Tuesday. Silver price remains under pressure as the US Dollar (USD) remains firm ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.2% higher to near 102.25, the highest level seen in 10 days. Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
Fed on hold as markets eye December hike signals
Analysts at Commerzbank note that the Fed is "widely expected to leave its policy rate unchanged at 3.75-4.00% on Wednesday, following September's 25bp increase," with Fed funds futures reinforcing the steady-rate narrative in the near term.
They highlight that "the Fed funds futures are pricing in no change this week, a total hike of 22bp by end-2026, and a total hike of 69bp by end-2027," underscoring expectations for only limited additional tightening further out. Against this backdrop, Commerzbank argues that "the markets will look for the Fed's guidance on the likelihood of a hike in December," as investors assess whether persistently high inflation and upcoming US data could still push the FOMC toward another move later in the year.
This week, investors will also focus on the preliminary Q3 Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) Price Index for September, which are scheduled for Thursday.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $53.42, keeping a bearish near-term bias as spot remains well below the 20-day exponential moving average (EMA) at $57.82. The wide gap between price and this key dynamic barrier suggests ongoing downside pressure, while the Relative Strength Index (RSI) at 30.22 hovers near oversold territory, hinting that sellers still control the tape even as the latest leg lower begins to look stretched.
On the topside, the July 17 low at $54.77 is the immediate resistance before the 20-day EMA at $57.82, which would need to be reclaimed to ease the current bearish tone and open room for a more meaningful recovery. On the downside, the asset could extend its decline towards $50.00.
(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.
추천 기사
