Silver Price Forecasts: XAG/USD finds resistance at a previous support near $78.50
- Silver trims losses after a two-day reversal, but remains capped below $78.50.
- Fading hopes about a positive outcome of the US-Iran negotiations underpin the US Dollar.
- XAG/USD has broken the bottom of the ascending channel.
Silver (XAG/USD) nudges higher on Wednesday, but remains at the lower range of Tuesday’s trading, consolidating below $78.00 and with the previous support area of $78.50 capping upside attempts, for now.
Precious metals hover near recent lows, with investors in a “wait-and-see” stance, as the situation in the Middle East deteriorates, despite the ceasefire extension announced on Tuesday by US President Donald Trump. The US maintains the blockade of Iranian ports, which is considered a violation of the ceasefire by the Iranian authorities, while reports of attacks by Iranian forces on ships attempting to cross the waterway add pressure on an already-strained peace process.
In the US, the bright Retail Sales data released on Tuesday and the testimony of the Fed Chair Nominee, Kevin Warsh, provided a fresh boost to the US Dollar. The former Fed governor dismissed criticism of being a puppet of the White House and underscored the importance of the central bank’s independence in setting monetary policy. The US Dollar reacted positively to the event.
Technical Analysis
XAG/USD trades at $77.75, with bearish pressure mounting, after breaking the bottom of the ascending channel from late March lows on Tuesday. Technical indicators on the 4-hour chart support the bearish view. The Relative Strength Index (RSI) remains capped below the 50 level, and the Moving Average Convergence Divergence (MACD) is in negative territory, suggesting that sellers are gaining control.
On the topside, bulls remain capped below the April 19 low, at the $78.50 area. Further up, the confluence of the reverse trendline, now at $80.65, and the April 20 high, near $80.60, are lilely to pose a significant resistance.
Bears, however, need to break Tuesday's lows around $75.40 to shift the focus towards the mid-April lows around $72.60, ahead of the $70.00 psychological area.
(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
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
