Silver Price Forecast: XAG/USD recovery stalls below the 50-day SMA
Silver (XAG/USD) climbs more than 2% on Thursday as a ceasefire agreement between Israel and Lebanon weighs on the US Dollar (USD). At the time of writing, XAG/USD is trading around $74.80, but remains stuck within a familiar range between $72-$78 that has held since mid-May.
What's keeping Silver stuck in a range?
The metal is struggling to break out as the market awaits a clearer signal from the US-Iran talks. While the Israel-Lebanon ceasefire has improved sentiment and removed one obstacle in the diplomatic process, key issues between Washington and Tehran remain unresolved.
At the same time, the recent rise in Crude Oil prices has added to inflation concerns. That has fueled expectations that major central banks, including the Federal Reserve (Fed), may need to keep interest rates higher for longer. Higher borrowing costs tend to weigh on precious metals because they reduce the appeal of non-yielding assets.
What could trigger a breakout?
A meaningful breakthrough in the US-Iran negotiations could be the catalyst Silver has been waiting for. A deal between the two sides could lead to the reopening of the Strait of Hormuz, easing concerns over supply disruptions and potentially pushing Crude Oil prices lower. That would help reduce inflation pressures and could prompt markets to scale back expectations for higher interest rates.
On the other hand, renewed tensions or a breakdown in negotiations could boost demand for the US Dollar while driving Oil prices higher, increasing the risk of a downside break in XAG/USD.
Technical Analysis:
On the daily chart, XAG/USD keeps a bearish near-term bias as spot holds beneath the 50-day Simple Moving Average (SMA) at roughly $76.20 and well below the 100-day SMA near $80.84, while still trading comfortably above the 200-day SMA around $67.65.
The Relative Strength Index (RSI) is around 46, while the Moving Average Convergence Divergence (MACD) remains negative, which together hint that momentum still favors the downside, even as price consolidates above its longer-term trend floor.
On the topside, immediate resistance is seen at the 50-day SMA around $76.20, with a stronger barrier aligned at the 100-day SMA near $80.84, and only a break above this zone would ease the current corrective tone.
On the downside, immediate support is seen at the horizontal level near $72.00, ahead of the 200-day SMA clustered around $67.65, a break of which would open the door to a deeper retracement.
(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.
