Silver Price Forecast: XAG/USD tumbles to near $57 as inflation projections remain de-anchored
- Silver price declines to near $57.00 as elevated energy prices keep inflation expectations de-anchored.
- US President Trump threatens to widen attacks on Iranian infrastructure.
- The US CPI and PPI rose moderately in June, dimming hawkish Fed prospects.
Silver price (XAG/USD) trades 1.33% lower to near $58.00 during the European trading session on Thursday. The white metal faces selling pressure as elevated energy prices due to renewed aggression between the United States (US) and Iran have de-anchored inflation expectations again.
The scenario of higher global price rise projections forces central banks to support tight monetary conditions, which bodes poorly for non-yielding assets, such as Silver.
The resurgence of the Middle East war seems unlikely to cease anytime soon, as US President Donald Trump has threatened to widen attacks on Iranian infrastructure next week if the nation doesn’t come to the table for negotiations.
We’re going to knock out all their bridges unless they get to the table and negotiate,” Trump says in an interview with Fox News on Wednesday.
Meanwhile, traders have trimmed hawkish Federal Reserve (Fed) bets as US inflation has cooled down at both retail and wholesale levels. Both the US Consumer Price Index (CPI) and Producer Price Index (PPI) reports for June have shown that price pressures cooled down significantly.
The CME FedWatch tool shows that the odds of the Fed delivering an interest rate hike in the meeting later this month have dropped significantly to 10.2% from 31% recorded a week ago.
Silver technical analysis
Bias: XAG/USD trades lower at around $57, maintaining a bearish near-term tone as it holds below the 20-period exponential moving average (EMA) at $60.75. The price action remains pressured by this overhead dynamic resistance, suggesting that rallies are likely to be capped while spot silver trades under the EMA.
Momentum: Momentum, reflected by the Relative Strength Index (RSI) at 35.98, stays weak but above oversold territory, hinting at persistent selling pressure rather than a decisive exhaustion of the downtrend.
Resistance: On the topside, immediate resistance is located at the 20-day EMA around $60.75, which is the key barrier bulls would need to reclaim to ease the current bearish bias and open the way for a more sustained recovery. Above the 20-day EMA, the Silver price could advance towards the July 6 high of $61.37, followed by the June 22 high of $67.17.
Support: On the downside, the major support level for the Silver price is the June 24 low at $55.63; failing to hold the same would expose it to the psychological level at $50.00.
(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.
