Silver Price Forecast: XAG/USD rises to near $66.40 as US Dollar declines, US CPI in focus
- Silver price (XAG/USD) jumps to near $66.40 amid weakness in the US Dollar.
- The Fed is expected to hike interest rates next week.
- TD Securities sees the US core CPI remaining contained.
Silver price (XAG/USD) is up almost 1% to near $66.40 during the Asian trading session on Wednesday. The white metal strengthens as the US Dollar remains under pressure despite expectations that the Federal Reserve (Fed) could raise interest rates at the policy meeting next week.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly lower to near 98.76. The USD Index is closer to its two-week low of 98.72 posted on Tuesday.
A lower US Dollar makes the Silver price a favorable risk-reward bet for investors.
According to the CME FedWatch tool, traders see a 60% chance that the Fed will raise interest rates in the September policy meeting. Hawkish Fed bets are propelled by a stronger-than-expected United States (US) Nonfarm Payrolls (NFP) report for August released on Friday.
Meanwhile, investors await the US Consumer Price Index (CPI) data for August scheduled for Friday to get fresh cues regarding the Fed’s monetary policy outlook.
TD sees core inflation easing but flags upside risks from tariffs
According to TD Securities, core inflation likely continued to moderate in August, with the bank projecting that "core CPI rose 2.3% on a y/y basis, down 10 bps vs July," while "headline inflation likely stayed unchanged at 3.4% y/y." However, the economists caution that "we see the risks to our forecasts as skewed to the upside given that we're assuming a number of large price declines in tariff-exposed goods categories."
Silver Technical Analysis
In the daily chart, XAG/USD trades at $66.42. The metal trades close to the 20-period Exponential Moving Average (EMA) at $65.79, reflecting a sideways trend.
The 14-period Relative Strength Index (RSI) at 53.68 sits in neutral-positive territory, suggesting modest bullish momentum rather than overbought conditions.
On the downside, initial support is seen near the August 19 low at $62.19, followed by the psychological level of $60.00. Looking up, the June high at $71.56 appears to be a strong barrier for the Silver price bulls.
(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.
