Silver Price Forecast: XAG/USD rises above $60.00 as inflation fears ease
- Silver appreciates due to a decline in oil prices eases inflationary concerns and Fed rate hike expectations.
- Oil prices fall after President Trump reported "productive" Iran discussions and ruled out military strikes before midterm elections.
- CME FedWatch Tool suggests that markets price in nearly a 17.7% chance of a Fed 25-basis-point rate hike in October.
Silver price (XAG/USD) gains ground after three days of losses, trading around $60.10 per troy ounce during Asian hours on Friday. Non-yielding Silver gains support as a decline in oil prices eases inflationary concerns and Fed rate hike expectations.
Oil prices eased following statements from US President Donald Trump on social media, where he announced that the US was engaged in "productive discussions" with Iran and would refrain from attacking the country before the midterm elections.
Markets are now pricing in nearly a 17.7% chance that the US central bank will lift the interest rate at least 25 basis points (bps) at the policy meeting later this month, down from 38% a week ago, the CME FedWatch tool showed. Markets are pricing in an 83% chance of a hike at the Fed's December meeting.
Fed’s Musalem delivers a firmly hawkish message, with a 7.3/10 FXS Speechtracker score essentially in line with the 7.2/10 historical average, underscoring continuity rather than escalation in tone. The emphasis that “more monetary policy firming will be required” to bring inflation back to 2% while the economy and job market are described as strong and balanced reinforces a narrative of additional rate hikes rather than cuts, supportive of the Dollar and yields. Musalem’s focus on persistent demand pressures, anchored market inflation expectations, and structurally higher real rates driven by strong capital demand and AI-related investment points to a higher-for-longer rate environment.
The FXS Fed Sentiment Index slipped by 0.25 points to 138.33, indicating a modest pullback in perceived hawkishness despite remaining deep in hawkish territory. With the index well above the neutral 100 threshold, the speech still signals a policy stance biased toward further tightening, even as the marginal decline suggests markets may have already priced in much of this hawkish guidance captured by the FXS Speechtracker.
Fed’s Waller delivered a distinctly hawkish message, with an 8/10 FXS Speechtracker score standing above the 7.2/10 historical average and reinforcing expectations for tighter policy. The emphasis that “more hikes [are] needed” while allowing that they need not come at consecutive meetings signals a preference for a higher terminal rate but with tactical flexibility, especially as Waller highlights persistent inflationary forces from AI investment and energy shocks alongside a strengthening economy and a solid labor market. Concern that inflation has been above target for nearly 5-1/2 years and could unanchor expectations underscores a bias toward further tightening, supportive of the Dollar and negative for risk-sensitive currencies.
Technical Analysis:
In the daily chart, XAG/USD trades at $60.10, maintaining a bearish near-term bias as spot remains under both the short-term and medium-term Exponential Moving Averages (EMAs). The nine- and 50-period EMAs sit overhead, suggesting the white metal is still capped by a layered technical ceiling, while the 14-day Relative Strength Index (RSI) around 40.7 hints at lingering downside pressure rather than outright oversold conditions.
On the topside, initial resistance is located at the nine-period EMA near $60.74, with a more robust barrier at the 50-period EMA around $63.39, where a sustained break would be needed to ease the current bearish tone and open the door to a more constructive recovery. With no clear structural support derived from the present dataset, any further slide from current levels would leave the metal vulnerable to discovering fresh demand zones lower down the chart.
(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.