Silver price forecast: XAG/USD rises to near $61.40 as US yields retreat, NFP eyed
- Silver price gains to near $61.40 as US Treasury Yields retreat from its multi-decade high.
- Fed’s Logan sees at least half-of-a-percent interest rate hike in the near term.
- Investors keenly await the US NFP data for September.
Silver price (XAG/USD) is up 0.55% to near $61.38 during the late Asian trading session on Friday. The white metal edges up as rally in United States (US) Treasury Yields has hit a pause.
10-Year US Treasury Yields have corrected to near 5.25% from its recent highs of 5.34%, the highest level seen since May 2002.
A slight correction in US Treasury yields has improved very-short term appeal of non-yielding assets, such as Silver. However, the broader trend of US bond yields remains firm as Federal Reserve (Fed) officials have signaled more interest rate hikes even after raising them by 25 basis points (bps) to 3.75%-4.00% in September.
Fed’s Logan delivered a notably more hawkish message, with a 9.2/10 FXS Speechtracker score standing well above the 8.1/10 historical average, underscoring a stronger tightening bias relative to the established baseline. The emphasis that higher yields may reflect increased term premiums, potentially reducing the need for additional tightening, sits in tension with explicit calls for at least 50 bps more in rate hikes and several further moves to ensure inflation returns to 2%, reinforcing a narrative of a still-not-restrictive stance and a strengthening economic expansion that is supportive for the Dollar. Overall, the tone signals a clear willingness to push policy rates higher until price stability is credibly restored.
The FXS Fed Sentiment Index rose by 1.68 points to 136.59, confirming a solid move deeper into hawkish territory well above the neutral 100 threshold. This combination of a higher index level and an elevated FXS Speechtracker score points to rising market expectations for further Fed tightening, a backdrop typically constructive for the Dollar and a headwind for risk-sensitive currencies.
On the economic data front, investors keenly await the US Nonfarm Payrolls (NFP) data for September, which will be published at 12:30 GMT.
According to Bloomberg consensus, nonfarm payrolls to rise by 90,000 in September, down from 162,000 in August, while the unemployment rate is forecast to remain unchanged at 4.1%.
Silver Technical Analysis
In the daily chart, XAG/USD holds decisively below the 20-day exponential moving average (EMA) at $63.48, keeping the near-term tone bearish as price remains capped by this short-term trend indicator. The Relative Strength Index (14) at 41.64 stays below the neutral 50 line, hinting at persistent downside pressure rather than oversold exhaustion.
On the topside, immediate resistance is August 19 low at $62.19, followed by the 20-day EMA at $63.48. Looking down, the psychological level of $60.00 is the key suppory level; below that, the asset could decline towards the August 3 low at $56.57.
(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
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
