Silver Price Forecasts: XAG/USD licks its wounds above $61.00 amid a strong US Dollar

Silver remains on the defensive near $61.00, weighed by Fed hiking hopes and risk-off markets
A rout in tech stocks has soured market sentiment further, increasing demand for the safe-haven US Dollar.
XAG/USD is consolidating losses, with the bearish trend still in play.

Guillermo Alcala FXStreet

Silver (XAG/USD) nurses marginal losses, trading a few cents above the $61.00 level on Wednesday’s European trading session. The pair remains on the defensive following a 5.3% sell-off on Tuesday, as investors brace for Federal Reserve (Fed) interest rate hikes and reports from the Middle East conflict cloud hopes of a durable peace deal.

Precious metals continue bleeding as traders position for higher interest rates in the US. Recent US data has shown a resilient economy with inflation steady well above the Fed’s target, and the central bank’s rhetoric pivoting towards the hawkish side. The CME’s Fed Watch Tool shows a 36% chance of a rate hike in July and 68% in September, up from 28% and 50%, respectively, last week, before the latest monetary policy meeting.

Apart from that, the US Dollar is drawing additional support from investors’ scepticism about the outcome of the US trade deal and a sell-off in stock markets. Investors are taking profits amid growing concerns about the massive spending in the sector.

Technical Analysis: Below $60.00, the next target is the $58.00 area

XAG/USD hit fresh 2026 lows at $60.74 earlier on the day, but so far it is failing to find acceptance below the $61.00 level. Momentum indicators are approaching oversold levels in most timeframes, which should act as a warning for sellers.

The Relative Strength Index (14) in 4-hour charts is hovering around 30, flirting with oversold territory, while the Moving Average Convergence Divergence (MACD) remains below zero, hinting that selling pressure still dominates despite the stretched conditions.

Below session lows at the mentioned $60.74 and the psychological level at $60.00, bears might be attracted by the 161.8% Fibonacci extension of last week's decline, at $58.25, before the December 4 low, at $56.47. Upside attempts remain shallow so far, with previous support at $63.31 and Monday's highs at the $67.00 area likely to pose a significant challenge for bulls.

(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

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.

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