Silver Price Forecast: XAG/USD tumbles to near $74 as dovish Fed bets remain confined
- Silver price trades sharply lower to near $74.00 ahead of the opening of the US markets.
- The Fed is unlikely to cut interest rates in the March and April policy meetings.
- Investors await the outcome of US-Iran talks in Geneva.
Silver price (XAG/USD) is down almost 3% near $74.00 during the European trading session on Tuesday. The white metal is under pressure ahead of the opening of the United States (US) markets after an extended weekend.
The commodity has been on the backfoot due to market expectations that the Federal Reserve (Fed) will not cut interest rates in the near term.
According to the CME FedWatch tool, traders are confident that the Fed will not cut interest rates in the March and April monetary policy meetings.
Dovish Fed prospects have remained confined even as the US inflation has cooled down in January. The data showed on Friday that the headline and core inflation dropped to 2.4% and 2.5%, on an annualized basis, respectively.
For fresh cues on the US interest rate outlook, investors await the release of Federal Open Market Committee (FOMC) minutes and the flash Q4 Gross Domestic Product (GDP) data releasing this week.
On the global front, investors await the outcome of second round of talks between the US and Iran in Geneva over the nuclear programme.
Silver technical analysis
-1771328615665-1771328615666.png)
In the daily chart, XAG/USD trades at $74.45. The 20-day EMA has rolled over and sits at $83.38, capping rebounds and reinforcing a bearish bias. Price remains beneath this gauge, keeping trend pressure pointed lower. RSI at 42.66 (neutral) drifts down, confirming weak momentum without oversold conditions.
A decisive close above the 20-day EMA at $83.38 would temper downside pressure and open room for recovery, while rejection at that barrier would keep sellers in control. RSI staying below the 50 midline would maintain negative momentum; a push back above it would strengthen any rebound attempt.
(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.
