Silver Price Forecast: XAG/USD struggles around $76 amid US-Iran deal uncertainty

Silver price remains below the key hurdle of $76.00 as investors doubt the US-Iran reaching a deal soon.
Iran remains adamant on keeping uranium enrichment and control over the Strait of Hormuz.
The Fed is expected to either hold interest rates steady or deliver at least one interest rate hike this year.

Sagar Dua FXStreet

Silver price (XAG/USD) faces selling pressure near $76.00 during the European trading session on Friday. The white metal trades lower due to uncertainty over whether the United States (US) and Iran will reach a deal.

Comments from Tehran, as reported by the Iranian Labour News Agency (ILNA), state that the final draft of the peace proposal with the US has been reached; however, Iran’s hard stance on preserving uranium stockpiles and a prolonged toll system over the Strait of Hormuz keep the hopes of the deal announcement under pressure.

The Silver price has underperformed in the past few months, as oil prices remain elevated due to the closure of the Hormuz. Higher oil prices have prompted US inflationary pressures, a scenario that has forced traders to price out the possibility of interest rate cuts by the Federal Reserve (Fed) this year.

According to the CME FedWatch tool, the odds of the Fed holding benchmark lending rates at their current levels or delivering at least one interest rate hike are 50.8% and 48.1%, respectively.

Theoretically, squeezed dovish Fed bets diminish the appeal of non-yielding assets, such as Silver.

Silver technical analysis

XAG/USD trades lower at around $75.90 at the press time. The white metal reflects a bearish near-term bias as price holds below the 20-day Exponential Moving Average (EMA) at $77.79 and struggles to return above the upward-sloping trendline, which is plotted from the March 23 low of $61.01.

The Relative Strength Index (14) around 47 leans slightly negative but not yet oversold, hinting at persistent but moderate downside pressure.

On the topside, initial resistance is located at the 20-day EMA at $77.79, with the broken ascending trend line at $78.07 reinforcing a nearby cap that bulls would need to clear to ease the current downside bias. The white metal could rise to near $80.00 if it manages to return above the 20-day EMA.

On the downside, the spot could slide to $70 if it fails to hold the May 19 low of $73.09.

(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.

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