Silver Price Forecast: XAG/USD sees fresh downside leg below $60 amid hawkish Fed bets

Silver price refreshes six-month low at $60.74 as the Fed is expected to raise interest rates this year.
The CME FedWatch tool shows that the Fed will deliver at least two interest rate hikes this year.
Investors await the US PCE Inflation data, which will be released on Thursday.

Sagar Dua FXStreet

Silver price (XAG/USD) posts a fresh over six-month low at $60.74 during the Asian trading session on Wednesday. The white metal faces selling pressure as traders seem confident that the Federal Reserve (Fed) will deliver at least two interest rate cuts this year.

According to the CME FedWatch tool, the odds of the Fed hiking interest rates this year are almost 86%. This is a sharp turnaround from two interest rate cuts projected before the onset of the Middle East war, which led to a significant increase in inflationary pressures.

Theoretically, higher interest rates by the Fed bode poorly for non-yielding assets, such as Silver.

Meanwhile, the rising US Dollar (USD) due to hawkish Fed bets is also hurting the Silver price. At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 101.50, the highest level seen in over a year. Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.

For more cues on the United States (US) interest rate outlook, investors await the Personal Consumption Expenditure Price Index (PCE) data for May, which will be published on Thursday. The US core PCE inflation, which is the Fed’s preferred inflation gauge, is expected to arrive higher at 3.4% Year-on-Year (YoY) from 3.3% in April.

Silver technical analysis

Bias: XAG/USD trades lower at around $61.00, extending a bearish near-term bias as price holds well below the 20-day Exponential Moving Average (EMA) at $68.09.

Momentum: The metal continues to slide away from recent highs, and the Relative Strength Index (14) at 31.92 hovers just above oversold territory, suggesting persistent downside pressure even as the selloff begins to look stretched.

Support: The Silver price is expected to extend its decline toward the December 4 low at $56.47 if it slides below $60.00. A further decline below $56.47 would expose the asset to the psychological support of $50.00.

Resistance: On the topside, the 20-day EMA at $68.09 is the first meaningful resistance, and a recovery above this cap would be needed to ease the current downside control. Until that barrier is reclaimed, momentum favors further softness, with traders likely to fade rebounds while RSI remains depressed.

(The technical analysis of this story was written with the help of an AI tool.)

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.

GBP/USD clings to multi-day peaks below 1.3500

GBP/USD trades with marked gains on Friday, now giving away some gains following an earlier surpass of the key 1.3500 yardstick. Indeed, Cable gathers fresh steam amid the strong offered stance in the Greenback, all after US NFP badly missed expectations in July.

EUR/USD: Post-NFP bounce falters around 1.1580

EUR/USD reverses Thursday’s decline and trades with solid gains in the 1.1560 region, or two-month peaks, on Friday. The pair’s firm performance comes in a context of a sharp correction in the US Dollar as investors continue to assess disheartening US NFP readings.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

XRP Price Forecast: XRP nears critical $1.00 support

Ripple (XRP) remains pressured on Friday, trading around $1.03 at the time of writing. The token appears to hold this current level as support but lacks a catalyst to sustain a knee-jerk rebound toward the next key resistance at $1.10.

Is Gold about to enter its biggest bull run since 2020?

Gold has stormed back into the spotlight and its next move could leave late buyers chasing. On August 5, the yellow metal surged almost 7% – roughly $174 – to close near $4,308 an ounce, posting one of its biggest daily advances in recent history. A weaker U.S dollar, falling Treasury yields, changing Federal Reserve expectations and renewed safe-haven demand all struck at once.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.