Silver Price Forecast: XAG/USD holds majority losses near $74 as fears of hawkish Fed outlook revives
- Silver price recovers half of its early losses, still almost 2% down at around $74.35.
- US-Iran high-stakes talks collapse as Iran refuses to give up its nuclear ambitions.
- US President Trump acknowledges that gas prices could remain elevated through November elections.
Silver price (XAG/USD) claws back half of its early losses and rebounds to near $74.35 during the early European trading session on Monday, but is still almost 2% down. The white metal is broadly under pressure as a sharp recovery in the oil price due to failed talks between the United States (US) and Iran, which were scheduled over the weekend in Pakistan, has de-anchored inflation expectations again.
Negotiations between the US and Iran towards a permanent ceasefire in the Middle East failed to succeed as Tehran denied giving up its nuclear ambitions, according to US President Donald Trump’s post on Truth Social.
In response, US President Trump instructed the Navy to blockade maritime traffic entering and exiting Iranian ports.
Meanwhile, US President Trump has also acknowledged, in an interview with Fox Business, that US gas prices could remain at their current levels or higher through the November elections.
The revival in elevated inflation expectations in the wake of higher oil prices is expected to force traders to raise bets supporting interest rate hikes by the Federal Reserve (Fed) in the near term, a scenario that typically diminishes demand for non-yielding assets, such as Silver.
In late March, traders were pricing in two interest rate hikes by the Fed this year but priced out, following the announcement of a two-week ceasefire between the US and Iran.
Silver technical analysis
XAG/USD trades lower at around $74.35 during the press time, holding a neutral near-term bias as it remains close to the 20-day exponential moving average (EMA), which is around $75.05.
The 14-day Relative Strength Index struggles to return above the 50.00 mark, hinting that recovery attempts may continue to face selling pressure on approaches to higher levels.
On the downside, initial support is seen near the former upward trend-line break zone around $73.74, where buyers could look to slow the decline. On the topside, a daily close back above the 20-day EMA at $75.05 would be needed to ease the current bearish tone and open the way for a more sustained rebound towards the April 2 high of $81.13.
(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.
