Silver Price Forecasts: XAG/USD tests levels sub-$63.00 as bearish pressure mounts

XAG/USD hit session lows at $62.20 on Wednesday, after rejection at $66.50.
Investors' cautiousness about Middle East uncertainty is weighing on precious metals.
A confirmation below $63.30 shifts the focus towards the $60.90 area.

Guillermo Alcala FXStreet

Silver (XAG/USD) trades lower for the second consecutive day on Wednesday, exploring prices below the $63.00 level at the time of writing, after a reversal from the $66.50 area on Tuesday. Precious metals are struggling as markets turn cautious amid the deterioration in the Middle East crisis, with oil prices consolidating at higher levels.

The Memorandum of Understanding between the US and Iran expired on Monday, and US President Donald Trump confirmed on Tuesday that there are no talks with Tehran at the moment. Sea traffic through the Strait of Hormuz, meanwhile, remains limited to a trickle, which keeps Oil prices on the rise, with Brent Oil at $90 after rallying about 6% over the last three days.

Technical Analysis: Bears are pushing against the $63.30 support area

XAG/USD trades at $63.06, with bears pressing against the support area near the $63.30 level, which is the floor of last week's trading range and a previous resistance area. Intra-day momentum indicators endorse the bearish view, with the 4-hour Relative Strength Index (14) retreating toward the mid-30s, and the Moving Average Convergence Divergence (MACD) treading deeper into negative territory.

A confirmation below the mentioned $63.30 area would shift the focus towards the August 6 low at the $60.90 area, ahead of the late July and early August lows, in the mid-range of the $56.00s.

On the topside, if the pair manages to hold above $60.30, bulls might regain confidence to launch another attack to the resistance area around $67.00 (June 22, August 12 highs) ahead of a key resistance zone between mid-June highs, in the $71.55 area, and the 200-day Simple Moving Average (SMA) at $71.85.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.

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