Silver Price Forecast: XAG/USD shines above $33.00 as US inflation dips
- XAG/USD surges to two-week highs amid softer inflation data and persistent tariff worries
- US CPI misses forecasts, fueling speculation of Fed easing and boosting Silver’s allure despite rising yields.
- Technical indicators remain bullish; RSI signals further upside as Silver buyers aim at February’s peak of $33.39.
Silver price rallied to three-week highs as it cleared the $33.00 handle on Wednesday, posting gains of over 0.90%, unfazed by a jump in US Treasury bond yields and a strong US Dollar. At the time of writing, XAG/USD trades at $33.21 after bouncing off daily lows of $32.70.
A softer-than-expected US inflation report revealed that the Consumer Price Index (CPI) dipped in headline and core measures. Although this spurred speculation that the Federal Reserve (Fed) might lower borrowing costs, it's just one month of good data, which, according to Fed Chair Jerome Powell, is not enough to stir the boat.
Meanwhile, traders continue to digest US President Donald Trump's tariff rhetoric. Trump threatens further tariffs as the EU and Canada retaliate.
XAG/USD Price Forecast: Technical outlook
Silver's price remains upward-biased after bottoming near $32.00 for the last four trading days. Since then, XAG/USD has been up more than 2% in the week, and with momentum being a tailwind for the grey metal, further gains are seen.
The Relative Strength Index (RSI) is bullish, signaling buyers are in charge.
The first resistance would be the February 14 daily high at $33.39. A breach of that level will expose the $34.00 figure. Should sellers step in, they must clear $33.00. Once surpassed, prices could fall to March 11 swing low of $31.81.
XAG/USD Price Chart – Daily
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
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
