Silver Price Forecast: XAG/USD holds within range with bulls capped below $68.00 area
- XAG/USD fails ahead of the $68.00 resistance area and drops below $66.50.
- The Fed's hawkish repricing and a strong US Dollar are weighing on precious metals.
- The immediate trend remains positive, although indicators show fading momentum.
Silver (XAG/USD) has been capped just below the top of the last three weeks' trading range, at the $68.00 area on Wednesday, and pulled back to session lows below $66.50 during the Asian session. Market expectations of tighter monetary policies by most of the major central banks, including the Federal Reserve (Fed), and a solid US Dollar, as the USD Index consolidates above 100.00, are acting as headwinds for precious metals.
Markets remain calm in the first half of the week with Japan on a three-day holiday, which is keeping trading volumes at unusually low levels. The recent pullback in Oil prices is providing some support, but traders await developments at the UN Summit, namely the meetings between US President Donald Trump and the Iranian President Masud Peseshkian, and with the Chinese President Xi Jinping before making investment decisions.
Technical Analysis: Silver lacks momentum to break above the range top
XAG/USD trades at $66.24, holding a broadly neutral tone, with the technical picture showing a consolidation phase, with price action limited roughly between $62.00 and $68.00. Momentum indicators in the 4-hour chart show a lack of clear bias, with the Relative Strength Index (RSI) nearing the 50 midline and the Moving Average Convergence Divergence (MACD) hovering around the zero line.
On the topside, bulls have been capped at the $68.00 area, which has held rallies several times in September. A confirmation above here would expose the late August and mid-June highs in the area between $71.12 and $71.56.
Bearish attempts, on the other hand, are likely to find support at Tuesday's low around $64.60 ahead of the range bottom, at the $62.30 area (September 14, 16 lows). A clear break of these levels would activate a large Head & Shoulders (H&S) pattern and highly likely increase bearish pressure towards the August 6 low at the $60.90 area and the August 4 low in the mid-range of the $59.00s
(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
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.
