Silver Price Forecast: XAG/USD holds firmly above $69 ahead of US PCE Inflation data
- Silver price jumps to near $69.40, capitalizing on plunging oil prices.
- Iran and Oman have agreed to resume talks surrounding safe navigation through Hormuz.
- Investors await the US PCE Inflation data for July and the Jackson Hole Symposium.
Silver price (XAG/USD) is up almost 1% to near $69.40 during the Asian trading session on Wednesday. The white metal gains as oil prices fall further on hopes that the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply, will reopen soon, following reports that Iran and Oman have resumed talks to establish a “temporary joint maritime corridor” for safe navigation.
On Tuesday, Iranian Foreign Minister Abbas Araghchi and his Omani counterpart Badr Albusaidi discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz, Bloomberg reported.
This has eased fears of a prolonged energy supply disruption, a scenario that could anchor rising global inflation expectations and diminish interest rate hike expectations for various central banks. Such a case bodes well for non-yielding assets, like Silver.
Meanwhile, investors await the United States (US) Personal Consumption Expenditure Price Index (PCE) data for July, which will be published at 12:30 GMT. The US core PCE inflation, which is closely tracked by Federal Reserve (Fed) officials, is expected to have remained steady at 3.3% Year-on-Year (YoY), with monthly figures rising at a 0.2% pace, faster than the June reading of 0.1%.
This week, the major trigger for global markets will be the outcome of the Jackson Hole Symposium, which will begin early Thursday.
Jackson Hole looms as key test of Fed communication and inflation resolve
According to TD Securities, “Friday's Jackson Hole Symposium looms large,” with the event set to be “this week's main macro event in markets.” The bank expects investors to look for “an improved version of Fed Chair Kevin Warsh through his prepared remarks,” alongside “some sort of firmer and more explicit commitment toward the inflation mandate.”
TD Securities cautions, however, that “while Chair Warsh will seek to improve his communication with markets at Jackson Hole, forward guidance will still be lacking,” and his appearance may “only rehash prior remarks that will likely focus on the big picture and regime change.” Against that backdrop, the bank reiterates that “we expect the Fed to remain on hold over our forecast horizon.” With inflation “high for the rest of the year” and the labor market having “stabilized, allowing the FOMC to shift focus to its inflation mandate,” TD Securities argues that “if the Fed were to move this year, we believe that move is more likely to be a hike than a cut.”
Silver Technical Analysis
In the daily chart, XAG/USD trades at $69.17. The pair holds firmly above the 20-day Exponential Moving Average (EMA) at $65.12, keeping the near-term bias bullish as price extends its advance away from dynamic trend support.
The Relative Strength Index (14) at 64.65 sits in positive territory but shy of overbought, suggesting steady upward momentum without signs of immediate exhaustion.
On the downside, initial support emerges at the 20-day EMA around $65.12, where buyers are likely to defend the current advance if a corrective pullback unfolds. Looking up, the June 17 high at $71.56 appears to be the key hurdle.
(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.
