Silver Price Forecast: XAG/USD finds temporary support near $63.50; downside remains likely
- Silver price recovers to near $65.00 on renewed Middle East conflicts.
- The US CENTCOM launches attacks on Iran in retaliation for shooting down the US Apache helicopter.
- Iran’s Araghchi said that its neighbors should have a legal and moral responsibility to prevent American and Israeli strikes.
Silver price (XAG/USD) rebounds to near $65.00 in the European trading session on Wednesday after attracting bids at around over the two-month low of $63.45 earlier in the day. The recovery move by the Silver price appears lacking conviction as Middle East tensions have renewed, following exchange of attacks between the United States (US)-Iran.
The US Central Command (CENTCOM) confirmed launching a series of attacks on Iran’s air defense, ground control stations, and surveillance radar sites near the Strait of Hormuz, a move that was expected after US President Donald Trump vowed to retaliate against Iran for shooting down a US Apache helicopter.
In response, Iran’s armed forces launched missiles on US airbases in Jordan, Kuwait, and Bahrain, and have warned of more attacks. Iran's Foreign Minister Abbas Araghchi has also released a warning for its neighbors in the Gulf for supporting the US, stating that they should have a “legal and moral responsibility” to prevent American and Israeli strikes.
Signs of US-Iran tensions escalating are an unfavorable scenario for the Silver price, as it has prompted oil prices, which could keep global inflation expectations higher and eventually hawkish Federal Reserve (Fed) bets.
Higher interest rates by the Fed bode poorly for non-yielding assets, such as Silver.
Later in the day, investors will focus on the US Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT. The US headline and core CPI are expected to arrive higher at 4.2% and 2.9% Year-on-Year (YoY), respectively.
Silver technical analysis
XAG/USD bounces back to near $65.00 in the European trade. Still, the white metal holds a bearish near-term bias, as price remains well beneath the 20-day exponential moving average (EMA) at $72.89. The positioning below this key dynamic barrier suggests that sellers retain control, while the Relative Strength Index (RSI) at 32.09 hovers near oversold territory, hinting that downside pressure persists even as the pace of the decline could soon begin to moderate.
On the topside, the 20-day EMA at $72.90 is the first meaningful resistance that bulls would need to reclaim to ease the current downside pressure and open scope for a more sustained recovery. Looking down, the white metal could fall to the March 23 low at $61.01 if it fails to hold its recovery move.
(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.
