Silver Price Forecasts: XAG/USD edges up above $58.00 as the US Dollar trims gains
- Silver ticks up above $58.00 on Friday, but remains vulnerable after Thursday's reversal.
- A mild correction in the US Dollar Index is providing some relief to precious metals.
- XAG/USD remains above the descending trendline from early-June highs
Silver (XAG/USD) edges up on Friday's early European trading session, returning to levels above $58.00 as the US Dollar trims some gains. The precious metal is set to a moderate recovery this week, but the risk-averse scenario triggered by the escalating conflict in the Middle East and the higher US Treasury yields triggered a 4.3% reversal on Thursday that leaves Silver vulnerable to further depreciation.
Market sentiment remains unfavourable, with Oil prices rallying and Brent crude drawing closer to the key $100 level, as reports of attacks on vessels in the Red Sea increased concerns about the blockade of another key corridor for Oil supply. Investors' fears that a new energy shock will boost inflation pressures have sent US Treasury yields to multi-month highs, pushing the US Dollar higher across the board and weighing on the yieldless precious metals.
Meanwhile, a report from Axios suggests that US President Trump would be pondering a "massive attack" on Iran that might further entangle the conflict, increasing demand for the safe-haven Greenback.
Technical Analysis: The reverse trendline has capped bears
XAG/USD trades at $58.33, holding within the last two weeks' horizontal range, with downside attempts supported above the broken trendline from June highs. Momentum indicators endorse the neutral near-term bias, with the Relative Strength Index (14) hovering around 51 and the Moving Average Convergence Divergence (MACD) holding slightly in negative territory, hinting that buying pressure is moderate rather than impulsive.
Bulls, however, will have to breach the top of the mentioned range, at the $60.70-$60.90 area, and the early July highs, around $62.50, to confirm a trend shift. On the downside, first support emerges at the broken trendline, now at $56.50, with additional protection at the year-to-date low of $54.77. Further down, the 127.2% Fibonacci retracement of the mid-June selloff at $50.26 emerges as the next target.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
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.
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.
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.
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.
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
