Silver Price Forecast: XAG/USD remains vulnerable near $75 as oil prices hold weekly gains
- Silver price remains under pressure as the Oil price reflects strength amid the Hormuz closure.
- Major central banks are scheduled to announce their monetary policy next week.
- The Fed is expected to hold interest rates steady in the range of 3.50%-3.75%.
Silver price (XAG/USD) trades with caution near its 10-day low around $75 during the Asian trading session on Friday. The white metal has been under pressure as oil prices reflect strength due to the prolonged closure of the Strait of Hormuz, a critical passage to almost 20% of global energy supply.
During the press time, the WTI Oil price clings to gains near $95.00, the highest level seen in over a week.
Higher oil prices have remained a key drag on the Silver price, as they have prompted inflation expectations globally, which have discouraged central banks from turning dovish on the monetary policy outlook.
The event of steady or tight monetary conditions by global central banks bodes poorly for non-yielding assets, such as Silver.
Going forward, investors will focus on monetary policy announcements from a number of global central banks next week, including the Bank of Japan (BoJ), the Federal Reserve (Fed), and the European Central Bank (ECB).
The Fed is expected to leave interest rates unchanged in the range of 3.50%-3.75% and guide that the central bank will remain vigilant to upside inflation risks prompted by geopolitical tensions.
Silver technical analysis
XAG/USD trades lower below $75, maintaining a bearish near-term tone amid a breakdown of the Ascending Triangle formation on the daily chart. The break under the supportive upward-sloping border of the above-mentioned chart pattern suggests sellers retain control while the Relative Strength Index (14) at 45.26 stays below the midline, hinting at lacklustre upside momentum rather than an oversold condition.
Looking down, the April 13 low at $72.61 is the immediate support for the Silver price; a decisive break below this level would expose it towards the April 7 low of $68.28. On the topside, the initial hurdle is the upward-sloping border near $79.30, and only a sustained move above this level would widen the scope of further upside towards the horizontal barrier of the above-mentioned pattern around $83.35.
(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.
