Silver Price Forecast: XAG/USD declines to near $75 at the start of the week
- Silver price tumbles to near $75.00 as soft US CPI data fails to prompt dovish Fed bets.
- The Fed is unlikely to cut interest rates in the March and April policy meetings.
- A likely US military action in Iran could boost the demand for safe-haven assets.
Silver price (XAG/USD) trades 2% lower at around $75.00 during the Asian trading session on Monday. The white metal is under pressure as lower-than-expected United States (US) Consumer Price Index (CPI) data for January fails to prompt hopes of interest rate cuts by the Federal Reserve (Fed) in the near term.
Theoretically, lower inflation boosts hopes of monetary policy easing by the Fed in the near term. It seems that market participants are more focused on the labor market than on changes in price pressures.
According to the CME FedWatch tool, traders remain confident that the Fed will keep interest rates steady in the current range of 3.50%-3.75% in March and April.
The data showed on Friday that the US headline inflation cooled down to 2.4% Year-on-year (YoY) from 2.7% in December. On a monthly basis, the US headline CPI grew at a slower pace of 0.2% against estimates and the prior reading of 0.3%.
On the geopolitical front, investors remain concerned over tensions between the US and Iran. A report from Reuters has stated that the US military is preparing for the possibility of sustained, weeks-long operations against Iran if President Donald Trump orders an attack, a scenario that would force investors to shift to the safe-haven fleet.
Silver technical analysis
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XAG/USD trades down to near $75.61 as of writing. Price holds below the falling 20-EMA at $84.23, keeping the near-term bias heavy as trend pressure remains to the downside. The average continues to descend, underscoring persistent supply. RSI at 43.47 sits below the 50 midline, confirming weak momentum rather than capitulation.
Below the dynamic cap, rebounds could fade on approach to the average and keep the sequence of lower highs intact. A daily close above $84.23 would ease pressure and open room for a corrective recovery, with confirmation strengthened if RSI reclaims 50. Until that occurs, risk stays skewed toward further weakness, and rallies would be sold into.
(The technical analysis of this story was written with the help of an AI tool.)
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.
