Silver Price Forecast: XAG/USD regains ground below $71 despite Fed’s hawkish tilt
- Silver price rises to near $72.35 after gaining temporary support near $70.86.
- Diminished dovish Fed bets are expected to keep the Silver price under pressure.
- The Fed left interest rates unchanged on Wednesday, as expected.
Silver price (XAG/USD) is up 1.5% to near $72.35 during the European trading session on Thursday. The white metal gains ground after posting a fresh three-week low at $70.86 on Wednesday.
The outlook of the precious metal remains uncertain as the Federal Reserve (Fed) warns of upside inflation risks in the monetary policy announcement on Wednesday after leaving interest rates unchanged in the range of 3.50%-3.75%, as expected.
“We remain attentive to risks on both sides of our mandate,” Fed Chair Jerome Powell said in the press conference, adding, “The energy surge has not yet peaked.” Three rate-setting members advocated a move away from the easing bias as higher energy prices have de-anchored inflation expectations.
Meanwhile, the speculation for the Fed to cut interest rates this year has also diminished, following the Fed’s hawkish hold. According to the CME FedWatch tool, the odds of the Fed delivering one interest rate cut this year have fallen to 3.3% from 18.4% seen on Tuesday.
Theoretically, diminishing dovish Fed bets bode poorly for non-yielding assets, such as Silver.
In addition to diminishing dovish Fed prospects, a fresh upside move in the oil price, following comments from United States (US) President Donald Trump that Washington’s naval blockade on Iran will extend further, also weighs on the Silver price outlook.
Higher oil prices tend to prompt global inflation expectations, a scenario that discourages central banks from easing monetary conditions and eventually undermines the Silver price’s appeal.
Silver technical analysis
XAG/USD trades higher at around $72.35 as of writing. However, the near-term tone remains bearish as price holds below the 20-day Exponential Moving Average (EMA) at roughly $75.43. The separation between spot and this moving average suggests rallies remain vulnerable, while the Relative Strength Index (RSI) around 41 stays in negative territory yet shy of oversold, hinting at persistent but not extreme downside pressure.
On the topside, initial resistance aligns with the 20-day EMA near $75.43, where a daily close above would be needed to ease the current bearish bias and open the way for a more sustained recovery towards $80. Until that barrier is reclaimed, the metal is likely to remain subject to selling on rebounds. Looking down, the ongoing decline in the Silver price could extend further towards the April 7 low of $68.28.
(The technical analysis of this story was written with the help of an AI tool)
(This story was corrected at 07:45 GMT to say in the second bullet point that Diminished dovish Fed bets are expected to keep the Silver price under pressure, and not hawkish)
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.
