Silver Price Forecast: XAG/USD rebounds, but bearish technical outlook persists
- Silver stages a recovery as falling Treasury yields ease pressure on the non-yielding metal.
- The technical outlook remains bearish as XAG/USD trades below its key daily SMAs.
- The RSI near 36 signals weak momentum, while the MACD remains in negative territory.
Silver (XAG/USD) stages a rebound on Thursday after sliding nearly 6% the previous day. The recovery comes as mounting concerns over AI-related investments weigh on global equities and drive investors toward government bonds, triggering a sharp pullback in US Treasury yields and pushing the US Dollar (USD) lower. At the time of writing, XAG/USD trades around $570.05, up 2.54% on the day.
While the decline in the US Dollar and yields lifts the white metal, its recovery faces a challenge from expectations of additional Federal Reserve (Fed) rate hikes following back-to-back hotter-than-expected US CPI and PPI reports. Higher interest rates increase the opportunity cost of holding non-yielding Silver. According to the CME FedWatch Tool, traders expect the Fed to keep rates unchanged at its October 27-28 meeting, while pricing in around a 90% chance of a rate hike by December.
Technical analysis
On the daily chart, XAG/USD trades well below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), clustered between roughly $64 and $72. The Moving Average Convergence Divergence (MACD) remains negative, while the Relative Strength Index (RSI) around 36 near oversold territory, suggesting persistent downside pressure but without capitulation, as the Average Directional Index near 24 hints at a gradually strengthening trend rather than an explosive selloff.
On the topside, initial resistance emerges at the 23.6% Fibonacci retracement at $58.27, followed by the 38.2% retracement at $60.04 and the 50.0% retracement at $61.47, before a denser barrier forms around the 61.8% retracement at $62.91 in conjunction with the clustered 100-day SMA at $63.24 and 50-day SMA at $64.11. Further up, the 78.6% retracement at $64.95 and the prior cycle high near $67.55 guard the path towards the distant 200-day SMA at $72.28.
On the downside, a sustained break below July’s lows in the $55.00-$55 area could open the door to a deeper decline toward $50. Holding this support zone could encourage a corrective bounce from oversold levels rather than a decisive trend reversal.
(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.