Silver Price Forecast: XAG/USD recovers from YTD low, outlook remains uncertain
- Silver price rebounds to near $54.50 from its YTD low of $53.46.
- The outlook of the Silver price remains uncertain due to higher oil prices.
- Investors expect the Fed to hold interest rates steady on Wednesday.
Silver price (XAG/USD) claws back a majority of its early losses and rebounds to near $54.50 in the early European trade on Friday. The white metal bounces back after posting a fresh Year-Till-Date (YTD) low near $53.46.
The outlook of the Silver price remains uncertain amid rising oil prices due to energy supply risks. Higher oil prices stimulate global inflation expectations, a scenario that prompts expectations of higher interest rates by central banks. Such a case diminishes the appeal of non-yielding assets, like Silver. At press time, the WTI Oil price is up 1.5% above $100.
Energy supply risks have increased due to fears of fresh escalation in Middle East tensions. This week, the US State Department ordered non-emergency personnel and family members to leave American embassies in Saudi Arabia, Reuters reported.
Going forward, the major trigger for the Silver price will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. The Fed is almost certain to leave interest rates unchanged in the 3.75%-4.00% range. Investors will pay close attention to Fed’s guidance on inflation and the economic outlook.
The CME FedWatch tool shows that the Fed will hike interest rates in December after holding them steady this month.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $54.29, maintaining a bearish near-term bias as price holds well below the 20-day Exponential Moving Average (EMA) at $58.77. The metal remains pressured after its recent slide, while the Relative Strength Index (14) hovers near 32, hinting at lingering downside momentum but approaching oversold territory that could slow further losses.
On the topside, the 20-day EMA at $58.77 is the first meaningful resistance, and a sustained recovery above this barrier would be needed to ease the current bearish tone. With no nearby structural supports derived from the provided dataset, traders will likely watch the RSI’s behavior for signs that selling pressure is exhausting, though the broader configuration still favors sellers while XAG/USD trades under the key EMA cap.
(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.
