Silver Price Forecast: XAG/USD extends rally to near $90.00 amid geopolitical woes
- Silver price posts a fresh all-time high near $90.00 as the US threatens military action in Iran.
- Chiefs from global central banks have criticized Washington’s attack Fed’s independence.
- The US Dollar recovered strongly after the chiefs of global central banks supported Fed’s Powell.
Silver price (XAG/USD) extends its winning streak for the fourth trading day on Wednesday. The white metal rallies further to near $90.00 during the Asian trading session as demand for safe-haven assets remains firm amid geopolitical tensions.
Civil unrest in Iran as the general public demands political change due to surging inflation, falling Rial against the US Dollar (USD), and the government’s corruption has resulted in the killing of hundreds of protesters.
In response, United States (US) President Donald Trump has warned the military action in Tehran if the government continues killing protesters.
Meanwhile, higher concerns over Federal Reserve’s (Fed) independence, following criminal charges on Chairman Jerome Powell over mismanaging funds allocated for the renovation of Washington’s headquarters, which he called as “pretext”, a consequence of Fed setting interest rates based on its assessment of the public interest rather than the president's preferences”, have kept safe-haven assets on the front foot.
The event led to a sharp decline in the US Dollar, as market experts warned that an attack on the Fed’s autonomous status could weigh on US sovereign rating. However, the US Dollar has rebounded quickly after chiefs from global central banks have supported Fed’s Powell over his feud with President Trump.
“We stand in full solidarity with the Fed System and its Chair Jerome H. Powell,” heads of the European Central Bank (ECB), Bank of England (BoE), and nine other institutions said collectively on Tuesday.
Silver technical analysis
XAG/USD trades higher near $90.00 as of writing. The advance remains firm, with buyers maintaining control as momentum stretches into overbought territory.
The 14-day Relative Strength Index (RSI) at 74.77 (overbought) and rising from 72.52 confirms strengthening bullish pressure. While the bias points higher, stretched conditions could cap follow-through and prompt consolidation.
A moderation in momentum with RSI easing toward 70 would help reset the move and support a steadier grind. Conversely, a renewed acceleration in RSI toward the prior extreme near 85.90 would leave the rally vulnerable to a sharper pullback as momentum fatigue builds.
(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.
