Silver Price Forecast: XAG/USD reclaims $65 as rally in bond yields, US Dollar hits pause
- Silver price climbs to near $65.00 as US Treasury Yields and the US Dollar correct slightly.
- Hawkish Fed stance and US economic resilience could provide support to US yields and the US Dollar.
- Silver price continues to hold the key support level of $62.00.
Silver price (XAG/USD) is up 1.85% to near $65.00 during the European trading session on Friday. The white metal strengthens as rally in the US Dollar (USD) and United States (US) Treasury Yields appears to have hit a pause.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.2% to near 101.05. 10-year US Treasury Yields have corrected from the 19-year high of 5.22% to near 5.15%.
Theoretically, a corrective move in yields on interest-bearing assets results in an improvement in the appeal of non-yielding assets, such as Silver. While a lower US Dollar makes the Silver price a favorable risk-reward bet for investors.
However, the outlook of the US Dollar and US Treasury Yields appear to be bullish amid the Federal Reserve’s (Fed) higher-for-longer interest rates narrative, with officials warning of high inflation and expressing economic resilience.
Dollar strength underpinned as Fed officials flag scope for further tightening
Strategists at Brown Brothers Harriman observe that the USD is “powering forward against most major currencies,” with a hawkish Fed stance and widening US economic growth outperformance suggesting the Dollar “can keep flexing its muscle.” They point to comments from Fed Governor Michael Barr, who warned that “further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion,” reinforcing expectations that policy may need to tighten further.
BBH also highlights remarks from New York Fed President John Williams, who said the US economy shows “remarkable resilience,” while inflation remains the “big challenge” and that “another rate hike may be appropriate by the end of the year.” Taken together, BBH argues that Barr and Williams’ comments “strengthen the case for additional Fed funds rate hikes,” providing a supportive backdrop for continued Dollar strength.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $65, retaining a neutral near-term bias as it trades close to the 20-period exponential moving average (EMA), which is at $65.15.
The proximity of price to this short-term EMA hints that the metal is capped by immediate dynamic resistance, while the Relative Strength Index (RSI) at 50.03 sits in neutral territory, suggesting a lack of strong directional momentum and favoring further consolidation or a shallow pullback rather than a decisive breakout.
On the topside, initial resistance is defined by the 20-period EMA at $65.15, which needs to be reclaimed to ease downside pressure and open the way for a more constructive advance towards the September 3 high at $67.52. Looking down, the September 16 ow at $62.30 is the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.