Silver Price Forecast: XAG/USD corrects further to near $61 as oil prices attract bids
- Silver price plummets to near $61.00 as oil prices find support.
- Iran’s attack on commercial ships transiting through Hormuz has supported oil prices.
- Investors await the FOMC Minutes of the June policy meeting.
Silver price (XAG/USD) is down 1.35% to near $61.00 during the Asian trading session on Tuesday. The white metal extends its correction as oil prices see some buying interest, following headlines that Iran fired at least two missiles at commercial ships transiting through the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply.
Iran’s attack on commercial ships has renewed fears of energy supply disruption, whose impact on global inflation has already been witnessed by market participants in the past few months amid the war between the United States (US)-Israel and Iran.
The Silver price underperformed during the Middle East war, as the increase in inflationary pressures due to rising energy prices prompted fears of interest rate hikes by global central banks.
Higher interest rates bode poorly for non-yielding assets, such as Silver.
Going forward, the major trigger for the Silver price will be the release of the Federal Open Market Committee (FOMC) minutes of the June policy meeting on Wednesday. Investors will pay close attention to FOMC minutes to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
In the June policy meeting, the Fed decided to leave interest rates unchanged in the range of 3.50%-3.75% and signaled that the central bank will refrain from delivering forward-looking remarks on policy rates at the current policy juncture.
Silver technical analysis
XAG/USD trades lower at around $61.50, maintaining a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at $63.35. The downside tone is reinforced by the Relative Strength Index (RSI) hovering near 41, which suggests persistent but not extreme selling pressure as rebounds continue to be capped by the nearby EMA barrier.
On the topside, immediate resistance is located at the 20-day EMA at $63.35, and a sustained break above this level would be needed to ease the current bearish pressure and open the way for a more constructive recovery phase. Looking down, the psychological level of $60.00 will be the key support zone; below that, the Silver price could revisit the seven-month low of $55.63.
(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.
