Silver Price Forecasts: XAG/USD struggles below $74 amid geopolitical woes
- XAG/USD remains capped below $74.00, on track for a four-week losing streak.
- Geopolitical tensions and strong US macroeconomic figures are hurting precious metals this week.
- Silver has a cluster of supports around the $71.00 level.
Silver (XAG/USD) ticks higher on Thursday, but maintains its bearish near-term tone intact, with upside attempts capped below the $74.00 area, and on track for a four-week decline. Precious metals are struggling this week, as recent developments in the Middle East have hammered hopes of a swift end to the war, boosting demand for the safe-haven US Dollar.
Risk aversion eased somewhat on Thursday, amid news of an agreement between Israel and Lebanon to implement the ceasefire. Investors, however, remain reluctant to take excessive risks after so much back-and-forth, and with the negotiations between the US and Iran showing a lack of progress.
Beyond that, US data has been USD-supportive, adding negative pressure on precious metals. ISM Services Purchasing Managers’ Index (PMI) figures released on Wednesday showed a solid expansion of the sector’s activity, while the prices padr subindex rose at its fastest pace in nearly four years, highlighting the inflationary pressures of higher energy prices and endorsing the view that the Federal Reserve (Fed) will be forced to hike rates in late 2026 or early 2027.
Technical Analysis: Nearing a key support area around $71.00
XAG/USD trades at $73.16, keeping a bearish near-term tone, with price action contained within a descending channel. Momentum indicators in 4-hour charts endorse the bearish view, as the Relative Strength Index (RSI) hovers near 38, and the Moving Average Convergence Divergence (MACD) histogram remains at negative levels.
The mild recovery attempt witnessed on Thursday remains capped below a previous support area, at $73.90 (June 1 low), which so far is closing the path towards the weekly high, at the $77.00 area and the channel top, now around $77.50.
Downside attempts remain contained above session lows near $72.50 for now. Further down, the pair has a significant cluster of supports between the May 28 low, at $71.79, the base of the channel, around $71.55, and the late April low, at $70 86, which is likely to attract sellers.
(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.
