Silver Price Forecast: XAG/USD slides below $60 as sellers retain control
- Silver remains on the back foot despite a modest pullback in the US Dollar and Treasury yields.
- XAG/USD holds below its key daily SMAs, keeping sellers in control.
- The RSI drifts toward oversold territory, while the MACD remains negative.
Silver (XAG/USD) remains under pressure on Thursday even as the US Dollar (USD) and US Treasury yields ease. Sellers remain in control after a break below the $60 psychological mark, with the Relative Strength Index (RSI) drifting toward oversold territory. At the time of writing, XAG/USD trades around $58.83, down 1.87% on the day and hovering near two-month lows.
The benchmark 10-year US Treasury yield eases toward 5.30% after reaching 5.36% on Wednesday, its highest level since 2002. Despite the pullback, yields remain elevated near multi-year highs amid persistent inflation risks and expectations of additional rate hikes by the Federal Reserve (Fed). Higher borrowing costs increase the opportunity cost of holding non-yielding assets such as Silver.
Technical analysis
On the daily chart, XAG/USD maintains a bearish near-term bias as it trades below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs). Momentum conditions reinforce this tone, with the Relative Strength Index (RSI) slipping toward the mid-30s, while the Moving Average Convergence Divergence (MACD) stays below zero with a negative line, suggesting persistent downside pressure.
On the topside, initial resistance emerges at the $60 horizontal level, before the clustered band of the 100-day and 50-day SMAs around $64.11-64.23, which would likely limit any corrective bounce, ahead of the higher barrier at $67. On the downside, firm support lies at the $55.00 horizontal level. A break below this level could open the door toward the $50.00 psychological mark. As long as price trades below the nearby $60.00 level, the technical outlook would continue to favor sellers on rallies rather than a sustained recovery.
(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.