Silver Price Forecast: XAG/USD rises to near $36.50 amid Israel-Iran war
- Silver price gains to near $36.50 as Israel-Iran tensions have increased demand for safe-haven assets.
- US President Trump has proposed meeting with Iran to stop war with Israel.
- Investors expect the Fed to leave interest rates unchanged on Wednesday.
Silver price (XAG/USD) moves higher to near $36.50 during European trading hours on Tuesday. The white metal trades firmly as the aerial war between Israel and Iran has increased demand for safe-haven assets, such as Silver.
The Iranian military continues to launch airstrikes on Israel despite soughing after its Middle East peers to urge US President Trump to use his influence on Israeli Prime Minister Benjamin Netanyahu to push for an immediate ceasefire.
Meanwhile, United States (US) President Donald Trump has asked Vice President JD Vance and Middle East envoy to offer to meet with the Iranians this week at the sidelines of the G7 meeting, The New York Times reported.
This week, the monetary policy announcement by the Federal Reserve (Fed) on Wednesday is also a key trigger that will contribute in directing the new move in the Silver price.
According to the CME FedWatch tool, the Fed is expected to hold interest rates steady in the current range of 4.25%-4.50%.
Investors will look for cues about when the Fed will start reducing interest rates. A higher-for-longer interest rate stance by the Fed bodes poorly for non-yielding assets such as Silver.
At the press time, the US Dollar Index (DXY) trades broadly sideways around 98.20.
Silver technical analysis
Silver price rally pauses after posting a fresh over-a-decade high around $36.90. However, the near-term outlook of the white metal remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher, which is currently around $34.63.
The 14-day Relative Strength Index (RSI) retraces to near 60.00 after turning overbought. The odds are in favor that the RSI will resume the upside assuming that the near-term trend is bullish.
Looking up, psychological level of $40.00 will be the major resistance for the Silver price. On the downside, the October 22 high of $34.87 will act as key support for the asset.
Silver daily chart
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.
