Silver Price Forecast: XAG/USD gauges temporary support above $70 at the start of US NFP week
- Silver price struggles to regain traction after a carnage on Friday.
- Higher US Dollar due to Warsh’s nomination as new Fed chairman and profit-booking brought a bloodbath in the Silver price.
- Investors await the US NFP data for fresh cues on the Fed’s monetary policy outlook.
Silver price (XAG/USD) trades cautiously at around $80 during the Asian trading session at the start of the week, slightly above the fresh four-week low of $73.33 posted on Friday. The white metal strives to regain ground after last week’s mayhem, in which it lost over 30% of its value from the lifetime highs of $121.66, triggered due to a strong US Dollar (USD), profit-booking after a stalwart rally, and expectations of a hawkish Federal Reserve’s (Fed) monetary policy outlook.
Technically higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near its weekly high of 97.33.
The Greenback attracted significant bids on Friday after the White House nominated former Federal Reserve (Fed) Governor Kevin Warsh as the successor of current Chairman Jerome Powell. Market experts believe that Warsh’s selection would not dampen Fed’s independence, which was highly anticipated, following comments from United States (US) President Donald Trump several times that new Chairman will deliver more interest rate cuts.
Fed’s newly appointed Chairman Kevin Warsh is known for supporting a strong US Dollar while doing his job previously at the US central bank, indicating that monetary conditions could remain tight going forward.
This week, investors will focus on the US Nonfarm Payrolls (NFP) data for January, which will drive market expectations for the Fed’s monetary policy outlook.
Silver technical analysis
In the daily chart, XAG/USD trades at $81.38. Price holds above the rising 50-day EMA at $79.50, maintaining the medium-term uptrend. The average’s upward slope supports the broader bias. RSI at 44 (neutral) reflects cooled momentum after an overbought stretch. A sustained hold above the average could keep buyers engaged, while a close beneath it would expose downside.
With price anchored above the 50-day EMA, pullbacks would meet initial demand near that dynamic support. RSI below 50 caps upside near term; a rebound through the midline would improve impulse. If momentum stabilizes, bulls could attempt to extend the recovery, while failure to re-accelerate would keep trade contained.
(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.
