Silver Price Forecasts: XAG/USD stands tall near $67 supported by US Treasury’s buybacks
- XAG/USD holds most of Wednesday's gains and remains steady near $67.00.
- US Treasury's plan to boost bond buybacks sent yields lower and provided support to precious metals.
- Resistance at the 67.15 area is holding bulls for now.
Silver (XAG/USD) is practically flat on Thursday, holding most of Wednesday’s gains, trading just above $67.00 at the European session opening. The precious metal is drawing support from a softer US Dollar as the US Treasury unveiled a plan to double up liquidity support for longer-dated securities, and sent yields lower.
The plan is aimed at easing pressure on US long-term Government bonds, as the yield for the 30-year note hit 19-year highs at 5.33% earlier this week. Data from the US Treasury Department showed that national debt rose above $40 trillion on Tuesday, which prompted investors to request higher compensation on their bond purchases.
Analysts at MUFG/BTMU affirm that the policy backdrop is becoming less supportive for the Dollar, as "moderating Fed tightening expectations and Treasury efforts to contain long-end yields" are likely to "continue to cap dollar upside."
The experts argue that "while buybacks alone are unlikely to alter longer-term fundamentals, they do signal willingness by policymakers to lean against further yield increases," reinforcing the sense that "the relative-rate story that has supported the dollar is fading."
Technical Analysis: Above $67.15, the focus shifts to the $72.00 area
XAG/USD trades at $67.08, with the near-term structure showing a constructive bias, and bulls pushing against the resistance area at $67.10. Momentum indicators in the daily chart are positive, as the Relative Strength Index (RSI) hovers above 60 and the Moving Average Convergence Divergence (MACD) line trends higher above the Signal line.
A confirmation above the June 22 high at 67.17$ would clear the path towards the $70.00 psychological level and the key resistance area between the mid June highs at $71.60 area and the 200-day Simple Moving Average (SMA) around $72.00.
Downside attempts are being capped above $66.63 so far on Thursday. Further down, Wednesday's low near $62.20 and the August 6 low, at $60.87, are expected to test bearish attempts.
(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.
