Silver Price Forecast: XAG/USD struggles below key SMAs despite easing Fed hike bets
- Silver snaps a four-day winning streak as a firmer US Dollar caps gains.
- Weaker-than-expected US jobs data eases expectations of a near-term Fed rate hike, supporting Silver's near-term outlook.
- The technical backdrop remains bearish as the metal remains capped below major moving averages.
Silver (XAG/USD) pauses a four-day winning streak on Monday as buyers take a breather following last week's 5.55% rally. A firmer US Dollar (USD) is also capping the precious metal's upside. At the time of writing, XAG/USD is trading around $61.75, easing from its intraday high of $63.28, the highest level since June 23.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies is trading around 100.12, up 0.22% on the day.
Despite Monday's modest pullback, Silver's near-term outlook remains supported by easing expectations of a near-term Federal Reserve (Fed) interest rate hike following weaker-than-expected US Nonfarm Payrolls (NFP) data released on Thursday.
However, the technical picture tells a different story, as Silver remains capped below both its short- and long-term moving averages.
Technical analysis:
In the daily chart, XAG/USD remains in a bearish near-term bias as price holds below the 21-day Simple Moving Average (SMA) at $63.45 and the broader 200-day SMA at $70.06, underscoring a market that is still capped by medium- and long-term trend resistance.
The Relative Strength Index (RSI) has recovered from oversold levels but remains around 42, while the Moving Average Convergence Divergence (MACD) has turned slightly positive, suggesting the rebound may be temporary within the broader downtrend.
On the topside, initial resistance emerges at the 21-day SMA near $63.45, with a more meaningful barrier at the $70 horizontal level, reinforced by the 200-day SMA at $70.06 and the 50-day SMA at $71.05 clustering just above.
Further up, the 100-day SMA around $74.81 precedes additional caps at $80 and $90. On the downside, the next notable support is the horizontal floor near $55.00, where buyers could attempt to stabilize the decline if bearish pressure resumes.
In the weekly chart, XAG/USD holds a clear bullish structural bias as price remains well above the 100-week and 200-week Simple Moving Averages (SMAs) at roughly $48.34 and $36.24, respectively, underscoring a firmly supported medium-term uptrend.
Momentum, however, looks subdued: the RSI hovers near 43, while the Moving Average Convergence Divergence (MACD) remains negative, which together hint that upside traction is waning despite the broader bullish backdrop.
On the topside, initial resistance emerges at the 50-week SMA near $64.35, with a stronger barrier higher up at the 21-week SMA around $73.93, levels that would need to be reclaimed to revive a more aggressive bullish phase.
On the downside, immediate support is seen at the 100-week SMA at $48.34, ahead of the deeper structural floor at the 200-week SMA near $36.24, where the broader bullish trend would be expected to attract buyers on a more pronounced correction.
(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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