Silver Price Forecast: XAG/USD slides to three-week low below $80 ahead of Fed’s policy
- Silver price declines as the Fed looks set to maintain the status quo in its policy meeting on Wednesday.
- The Fed is expected to hold interest rates steady as surging oil prices have de-anchored inflation expectations.
- Heightened Middle East conflicts are expected to limit the downside in the Silver price.
Silver price (XAG/USD) is down 0.5% to near $80.00 in the late Asian trade on Monday. The white metal revisits the three-week low of around $78.00 during the day amid firm expectations that the Federal Reserve (Fed) will maintain a status quo in the monetary policy announcement on Wednesday.
According to the CME FedWatch tool, traders are confident that the Fed will leave interest rates unchanged in the range of 3.50%-3.75%. This will be the second straight meeting when the Fed will hold borrowing rates steady.
Fed’s longer pause after a monetary-easing campaign diminishes the demand for non-yielding assets, such as Silver.
The Fed is expected to leave interest rates steady as surged oil prices due to conflicts in the Middle East involving the United States (US), Iran, and Israel have prompted consumer inflation expectations. Gasoline prices in the US have already increased sharply, raising the burden on households’ income.
The CME FedWatch tool also shows that the Fed is unlikely to cut interest rates before the October policy meeting.
On the global front, heightened geopolitical tensions amid Iran’s conflicts are expected to limit the downside in the Silver price. Safe-haven assets, such as Silver, tend to perform better in an uncertain geopolitical environment.
Silver technical analysis
XAG/USD trades lower at around $80.00 at the press time. The near-term bias leans bearish as spot holds below the 20-day Exponential Moving Average (EMA) near $84.30, confirming a downside break of the recent consolidation band. Price has been posting lower highs while repeatedly failing to reclaim the clustered moving average region, which now tracks the short-term downtrend.
The 14-day Relative Strength Index (RSI) in the 40.00-60.00 range signals a sideways trend.
Immediate resistance aligns at the $82.00–$83.00 area, where recent highs converge just beneath the 20-day EMA and cap rebounds. A break above that zone would expose $85.00 as the next barrier and weaken the current bearish structure. On the downside, initial support stands at the February 20 low of $77.47, with sustained weakness below opening the way toward the February 17 low around $72.00. Bears retain control while price holds beneath the $83.00 region and the declining 20-day EMA.
(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.
