Silver Price Forecast: XAG/USD bears have the upper hand below $64.00 and 200-day EMA

Silver faces rejection near the $64.00 mark as traders keenly await the crucial FOMC rate decision.
Fed rate hike bets, surging US bond yields, and geopolitical risks support USD, capping XAG/USD.
The bearish technical setup suggests that the path of least resistance remains the downside.

Haresh Menghani FXStreet

Silver (XAG/USD) struggles to capitalize on the previous day's modest gains and fails to break above the $64.00 round figure during the Asian session on Wednesday. Traders now seem hesitant and opt to wait for the highly anticipated Federal Reserve (Fed) policy decision before positioning for the next leg of a directional move.

Heading into the key central bank event, traders seem to have fully priced in a 25 basis points (bps) Fed rate hike. Adding to this, oil-driven inflation risks remain supportive of surging US bond yields, which, along with escalating Middle East tensions, keep the safe-haven US Dollar (USD) firm near a two-week top. This caps the non-yielding XAG/USD.

From a technical perspective, the white metal keeps a mildly bearish near-term tone below the 200-day Exponential Moving Average (EMA) at roughly $64.13. The XAG/USD, however, trades above the 50.0% Fibonacci retracement of the July-August upswing at about $62.94 and the 61.8% retracement at $61.06, suggesting underlying support.

Meanwhile, negative Moving Average Convergence Divergence (MACD) readings and a Relative Strength Index around 46 hint that momentum still favors the downside unless the XAG/USD reclaims the 200-day EMA. This is followed by the 38.2% Fibo. around $64.82, with the 23.6% level near $67.15 acting as a higher barrier if a stronger recovery unfolds.

On the downside, initial support emerges at the 50.0% retracement near $62.94, with the 61.8% level at $61.06 as a deeper cushion, and a clear break below this zone would likely reinforce the prevailing bearish bias.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

XAG/USD daily chart

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.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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