Silver Price Forecast: XAG/USD struggles near two-month lows ahead of US CPI
- Silver struggles below $60 as traders await US inflation data due on Wednesday
- XAG/USD holds below the Bollinger Bands midline, reinforcing the bearish outlook.
- The ADX near 19 indicates limited trend strength, although the RSI and MACD continue to favour sellers.
Silver (XAG/USD) trades on the back foot on Tuesday, losing more than 1.5% as hawkish Federal Reserve (Fed) expectations and elevated US Treasury yields weigh on the non-yielding metal. However, a softer US Dollar (USD) helps contain losses ahead of Wednesday’s US Consumer Price Index (CPI) report. At the time of writing, XAG/USD trades around $59.25, near two-month lows.
The US Dollar Index (DXY), which tracks the Greenback against six major currencies, trades around 102.25, below Monday’s peak of 102.61, its highest since April 2025. A hotter-than-expected inflation reading could lift the US Dollar and Treasury yields and revive expectations of a rate hike at the Fed’s October 27-28 meeting, adding pressure on Silver.
Traders currently price in an 80% probability that rates will remain unchanged this month, according to the CME FedWatch Tool. In contrast, softer inflation could strengthen the case for a pause and offer the metal some relief, although elevated Oil prices keep inflation risks tilted to the upside and expectations of further Fed tightening alive. Higher borrowing costs increase the opportunity cost of holding non-yielding assets such as Silver.
Technical analysis
On the daily chart, XAG/USD remains under the Bollinger Bands Simple Moving Average (SMA) midline at $62.29, keeping the near-term tone bearish. Momentum backs this softer bias, with the Relative Strength Index (RSI) drifting toward the mid-30s and the Moving Average Convergence Divergence (MACD) histogram still negative, while the Average Directional Index near 19 suggests the downtrend is present but not strongly directional.
On the downside, immediate support sits at the Bollinger lower band near $57.42, ahead of the horizontal level at $55.50 and a deeper floor at $50.00. On the topside, initial resistance emerges at the Bollinger SMA midline around $62.29, followed by the upper band near $67.16, with more significant barriers at $70.00 and $75.00 that would need to be reclaimed to ease the current bearish pressure.
(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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