Silver Price Forecast: XAG/USD remains range-bound with a bearish bias
- Silver falls more than 2% as energy-driven inflation concerns strengthen expectations of a Fed rate hike.
- Traders await Tuesday’s US CPI data for fresh clues on the interest rate outlook.
- XAG/USD remains range-bound between $55.50 and $62.50, with the broader bias tilted lower.
Silver (XAG/USD) attracts sellers on Monday after renewed fighting between the United States (US) and Iran over the weekend revived energy-driven inflation concerns and reinforced expectations of a Federal Reserve (Fed) interest rate hike later this year.
At the time of writing, XAG/USD trades around $58.30, down more than 2% on the day.
According to the CME FedWatch Tool, traders are currently pricing in a 71% chance of a rate hike in September, up from 57% a week earlier. Higher borrowing costs tend to weigh on non-yielding assets such as Silver.
The US economic calendar is light on Monday, leaving traders focused on geopolitical headlines. Attention then turns to the US Consumer Price Index (CPI) data on Tuesday, which could shape near-term interest rate expectations and drive the next move in XAG/USD.
On the daily chart, XAG/USD remains largely range-bound between $55.50 and $62.50, a structure in place since late June. Silver holds well below the 200-day Simple Moving Average (SMA) at $70.37 and the 100-day SMA at $73.87, keeping the broader bias tilted to the downside.
Momentum remains weak, with the Relative Strength Index (RSI) near 37 staying below the neutral 50 level. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator hovers slightly in positive territory, pointing to a modest loss of selling momentum but falling short of confirming a recovery.
On the upside, initial resistance stands at the upper boundary of the range around $62.50. A clear break above this level could open the door toward the 200-day SMA at $70.37, followed by the 100-day SMA at $73.87.
On the downside, the $55.50 level remains the key support. A decisive break below this floor would end the current consolidation phase and expose Silver to another leg lower.
(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.