Silver Price Forecasts: XAG/USD nears seven-month lows at $61.00 as US yields jump
- XAG/USD has resumed its near-term bearish trend and approaches YTD lows in the $61.00 area.
- Rising Fed tightening hopes and higher US Treasury Yields are hammering precious metals.
- RSI studies in intraday charts are showing oversold levels.
Silver (XAG/USD) has resumed its downtrend on Tuesday, following a tame recovery attempt on Monday, and trades in the mid-range of $62.00, drawing closer to year-to-date lows in the $61.00 area.
Precious metals struggle on Tuesday as rising bets on US Federal Reserve (Fed) rate hikes this year boost Treasury yields. Recent US data and hawkish rhetoric from the new Fed Chairman, Kevin Warsh, have prompted markets to price in a 70% chance of some monetary tightening in September, according to data by the CME Group’s Fed Watch Tool.
The yield on the US benchmark 10-year Treasury note jumped to above 4.5% on Monday, though it has since pulled back, and the 2-year yield, closely tied to interest rate expectations, reached 4.23%, its highest level in the last 16 months. The rally in yields is weighing heavily on yieldless precious metals.
Technical Analysis: Bears aim for the $61.00 low
XAG/USD trades at $62.46, extending a bearish phase after losing the $63 handle. The4-hour Relative Strength Index (14) slips toward the oversold band, yet with no clear sign of a correction in sight. The Moving Average Convergence Divergence (MACD) stays in negative territory.
Immediate support is at the $61.00 area, which held bears in March and earlier in June. Further down, the $60.00 psychological level and the 127.2% Fibonacci retracement of the June 11-15 rally, at the $59.00 region, could act as support, considering the overstretched cycle.
On the topside, initial resistance appears at the June 19 low of $63.34. If this level is breached, the focus will shift to Monday's high, just above $67.00, ahead of the June 15, 16, and 18 highs between $71,20 and $71,55
(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.
