Silver Price Forecast: XAG/USD declines to near $79.30 as Iran closes Hormuz again

Silver price declines to near $79.30 on the re-closure of the Strait of Hormuz.
Iran closes Hormuz again in retaliation for Washington’s blockade.
Renewed Mideast tensions have improved the US Dollar’s safe-haven demand.

Sagar Dua FXStreet

Silver price (XAG/USD) is down 1.7% to near $79.30 during the early European trading session on Monday. The white metal faces selling pressure as Iran closes the Strait of Hormuz, a vital passage to almost 20% of global energy supply, again, as part of retaliation against the United States (US) continuous blockade of Iranian sea ports.

On Friday, Iran announced the complete opening of the Hormuz for all commercial ships after the ceasefire between Israel and Lebanon.

The closure of the Strait of Hormuz has resulted in a sharp increase in oil prices, with the WTI Oil price surging 3.7% to near $88.

Higher oil prices lead to de-anchoring global inflation expectations, a scenario that weighs on dovish central banks’ expectations, which eventually diminishes the appeal of non-yielding assets, such as Silver.

Meanwhile, the US Dollar (USD) ticks higher as the Hormuz closure and Iran’s denial of the resumption of negotiations with the US, have improved its safe-haven appeal. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 98.35. Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.

Silver technical analysis

XAG/USD trades lower at around $79.30 as of writing. However, the white metal holds a constructive bullish bias as price stays above the 20-day Exponential Moving Average (EMA) at $76.85 and the rising border of the Ascending Triangle formation coming in around $76. This positioning suggests buyers retain control after rebounding from recent lows, while a mid-range Relative Strength Index (RSI) near 56 hints at steady, rather than stretched, upside momentum.

On the downside, immediate support is seen first at the upward-sloping border of the above-mentioned chart pattern around $76. A close below $76 would weaken the near-term bullish structure and expose the price towards the April 13 low of $72.61. Looking up, the spot could extend its upward trend towards the March 12 high of $87.45 if it manages a decisive breakout above the April 17 high of $83.06.

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

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

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.

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