Silver Price Forecast: XAG/USD consolidates above $55 as downside momentum eases
- Silver falls as rising US Treasury yields offset support from a weaker US Dollar.
- Hawkish Federal Reserve expectations continue to weigh on non-yielding metals.
- Technically, XAG/USD consolidates above the $55 support zone while holding below key moving averages.
Silver (XAG/USD) trades on the back foot on Friday as rising US Treasury yields outweigh support from a weaker US Dollar (USD). At the time of writing, XAG/USD trades around $57.50, down 2% on the day and on track to close July in negative territory.
The US Dollar stays under pressure following suspected intervention by Japanese authorities to support the Japanese Yen (JPY). The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, hovers around 100.00 near six-week lows.
Meanwhile, US Treasury yields move higher as elevated energy prices keep inflation risks tilted to the upside, reinforcing expectations that the Federal Reserve (Fed) may maintain tighter monetary policy or raise interest rates later this year. Hawkish Fed expectations weigh on non-yielding metals such as Silver, as higher borrowing costs increase the appeal of interest-bearing assets.
While macroeconomic headwinds persist, the technical outlook points to signs of near-term stabilization within the broader bearish structure.
On the daily chart, XAG/USD is consolidating above the $55 support area. However, the broader structure stays bearish as Silver trades below the 21-day, 50-day and 100-day Simple Moving Averages (SMAs).
The Relative Strength Index (RSI) near 44 sits below the neutral 50 level, pointing to subdued buying pressure. Meanwhile, the positive Moving Average Convergence Divergence (MACD) reading suggests that downside momentum is easing.
On the upside, initial resistance is seen at the 21-day SMA near $58.50. A daily close above this level could support a recovery towards the 50-day SMA at $63, followed by the 100-day SMA near $70.
On the downside, immediate support is seen at the horizontal level around $55, with a deeper floor near $45 if selling resumes, keeping the metal vulnerable while it trades beneath its key moving averages.
(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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