Silver Price Forecast: XAG/USD bounces back but remains broadly fragile amid prolong US blockade fears
- Silver price jumps to near $73.60; however, its broader outlook remains bearish.
- US President Trump said the maritime blockade could last until Labor Day.
- Investors await the US NFP data for May.
Silver price (XAG/USD) trades 1.2% higher to near $73.60 during the Asian trading session on Thursday. The white metal rebounds after a sharp sell-off on Wednesday even as fears of a prolonged United States (US) blockade on Iranian sea ports have raised concerns over its outlook, a scenario that will be in action if the US and Iran do not reach to a permanent resolution.
On Wednesday, US President Donald Trump said in an interview with The New York Post’s "Pod Force One" program that the maritime US blockade could last until Labor Day, while expressing confidence that the scenario is unlikely.
As the Labor Day will be held of September 7, the US blockade on Iran for that long, which means no permanent peace deal between the nations and energy flows remaining restricted through the Strait of Hormuz energy flows remaining restricted through the Strait of Hormuz will be unfavorable for precious metals and currencies from economies highly dependent on oil imports.
The Silver price has been underperforming since the onset of the Middle East war as higher oil prices have prompted inflationary pressures globally and have forced traders to price in hawkish Federal Reserve (Fed) bets, a sharp turnaround from two interest rate cuts anticipated before the war started.
Theoretically, higher interest rates by the Fed bode poorly for non-yielding assets, such as Silver
On the US front, better-than-projected US ADP Employment Change data for May, released on Wednesday, has set a positive tone for the Nonfarm Payrolls (NFP) data for May, which is scheduled for Friday. The US ADP Employment data showed that 122K new jobs were created in the private sector, which were higher than 117K estimates and the prior reading of 105K.
Silver technical analysis
XAG/USD trades higher at around $73.35 at the time. However, the near-term tone of the Silver price remains bearish as it holds below the 20-day Exponential Moving Average (EMA), which is at $76.02. The downside bias is also reinforced by a subdued Relative Strength Index (RSI) around 43, which stays below the neutral 50 line and suggests lingering selling pressure rather than an imminent bullish reversal.
On the topside, the 20-day EMA at $76.02 is the immediate resistance that bulls would need to reclaim to ease the current bearish pressure and open the door for a more sustained recovery towards the May 25 high at $78.83. Looking down, the asset could slide towards the April 7 low of $68.28 if it decisively breaks below the May 28 low of $71.79.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Why do people invest in Silver?
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.
Which factors influence Silver prices?
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.
How does industrial demand affect Silver 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.
How do Silver prices react to Gold’s moves?
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.
