Silver Price Forecasts: XAG/USD stalls below $76.00 amid a cautious market optimism
- XAG/USD remains trapped halfway through recent ranges, with $76.00 holding bulls.
- Investors welcomed news about a 60-day US-Iran truce, but remain sceptical about a long-lasting peace.
- Technically, Silver remains in a choppy consolidation around $76.00.
Silver (XAG/USD) shows marginal losses on Friday and is on track to end the week little changed after wavering within a $7 range around $76. The precious metal bounced up from four week lows near $71.80 on Friday, but is failing to find acceptance above the mentioned $76.00 level, which leaves the pair in no man’s land.
Investors sold the safe-haven US Dollar across the board on Thursday after news reporting that the US and Iran had reached a deal to extend the ceasefire for 60 days and allow traffic through the Strait of Hormuz. Precious metals' rallies, however, remain limited, as markets are sceptical about a sustainable peace agreement.
In the US, Personal Consumption Expenditures (PCE) Price Index data revealed that inflation accelerated at its fastest pace in nearly three years in April, endorsing hopes of Federal Reserve (Fed) rate hikes at the end of this year or in early 2027.
Technical Analysis: Sideways trading around $76.00
XAG/USD is going through choppy consolidation, roughly between $72.00 and $79.00, with momentum indicators in 4-hour charts highlighting a hesitant market. The Relative Strength Index (RSI) hovers around the 50 line, and the Moving Average Convergence Divergence (MACD) indicator has turned positive, although lacking a distinct bias.
The pair hit resistance at a previous support level around $76.00 (May 26 low), which is closing the path towards the top of the horizontal channel, in the confluence of the May 19 and 25 highs in the $78.75-$78.90 area, and the 38.2% Fibonacci retracement of the Mid-may selloff, at $79.23.
On the downside, below Thursday's low at $71.79, the target is the late March, early April lows, around $68.00.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on May 29 at 06:40 GMT to say Fed rate hikes at the end of this year or 2027 and not 2026, as previously reported.)
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.
