Silver Price Forecast: XAG/USD consolidates as bulls struggle to clear the 21-day SMA
- Silver consolidates between $55 and $63, showing signs of stabilization.
- XAG/USD struggles to reclaim the 21-day SMA, keeping the bearish structure intact.
- Momentum indicators remain mixed, while the ADX points to a strong underlying trend.
Silver (XAG/USD) edges higher on Friday as a pullback in Oil prices pushes US Treasury yields lower, while the US Dollar (USD) fluctuates near recent highs. At the time of writing, XAG/USD trades around $58.60, up 2.40% on the day.
Despite the pullback, Oil prices and US Treasury yields remain elevated, keeping Silver's upside in check as persistent inflation concerns reinforce hawkish Federal Reserve (Fed) expectations.
Higher borrowing costs typically weigh on non-yielding assets such as Silver. According to the CME FedWatch Tool, traders see an 80% chance of a rate hike in September, although the Fed is widely expected to leave interest rates unchanged at next week’s meeting.
From a technical perspective, Silver has traded between $55 and $63 since late June, pointing to signs of stabilization following a series of lower highs and lower lows from May’s peak near $90.00.
However, XAG/USD is struggling around the 21-day Simple Moving Average (SMA) at $58.82, while the 50-day and 100-day SMAs at $65.44 and $71.21, respectively, keep the broader bearish structure intact.
Momentum indicators paint a mixed picture. The Relative Strength Index (RSI) near 45 points to subdued momentum, while the Moving Average Convergence Divergence (MACD) indicator sits slightly above the zero line, indicating moderate selling pressure. Meanwhile, the Average Directional Index (ADX) near 36 indicates that the broader trend retains meaningful strength.
On the downside, initial support is seen at the horizontal floor near $55, where buyers previously stepped in. On the topside, bulls need to reclaim the 21-day SMA at $58.82 to ease immediate downside pressure. Further resistance is located at $63 and the 50-day SMA at $65.44.
Only a sustained break above these barriers would begin to challenge the broader bearish structure, with the 100-day SMA at $71.21 acting as the next major hurdle.
(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
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
