Silver Price Forecasts: XAG/USD returns above $58.00 as US Dollar weakens
- XAG/USD appreciates beyond $58.00 after bouncing from $56.80 lows on Tuesday.
- The US Dollar is trimming gains against its main peers as investors position for the Fed's decision.
- The deteriorating situation in the Middle East is the main threat to Precious metal's tecovery.
Silver (XAG/USD) shows a moderate bullish tone on Wednesday, following a two-day reversal, with price action returning to levels above the $58.00 line at the early European trading session. Precious metals are drawing support from a slightly softer US Dollar (USD) as investors position for the outcome of the Federal Open Market Committee (FOMC) meeting later in the day.
The Federal Reserve (Fed) is expected to stand pat on rates, although futures markets are pricing a one-in-three chance of a quarter-point rate hike. The central bank, however, is likely to show concern about above-target inflation, which will be seen as a hint towards monetary tightening, and provide some support to the USD.
Investors are taking in stride the deterioration of the situation in the Middle East so far. Reports of Iranian attacks on Gulf countries and US-Saudi attacks on Iranian-backed Shiite groups in Iraq, allegedly killing 20 people, have failed to dent Silver’s recovery, as markets cling to hopes of a new round of negotiations, but a resumption of hostilities is highly likely to boost the safe-haven US Dollar and send precious metals to fresh lows.
Technical Analysis: Price action is forming a triangle pattern
XAG/USD trades at $58.03, halfway through the last two weeks' range, with a sequence of lower highs and higher lows forming a small triangle pattern. Momentum is mixed, as the Relative Strength Index (14) is hovering around 50, suggesting a stabilising bias, while below-zero Moving Average Convergence Divergence (MACD) highlights an unconvincing upside traction.
The top of the triangle, now around $59.28, and the $60.60 area, which capped bulls on July 9, 10 and 22, are likely to test bullish attempts. If these levels are broken, the measured target of the triangle pattern is a support-turned-resistance area, ahead of $63.00.
On the downside, immediate support is seen at the confluence of the triangle bottom and Tuesday's low in the $57.00 area. Further down, the year-to-date low, at $54.77, and the October 2025 high, near $57.40, are expected to hold bears.
(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.
