Silver Price Forecasts: XAG/USD drifts toward $60 as precious metals struggle
- XAG/USD nears two-month lows in the $60.00 area after rejection around $62.00 on Tuesday.
- High Oil prices and investors' cautiousness ahead of the Fed meeting minutes are supporting the US Dollar.
- The rebound in US Treasury yields poses additional pressure on precious metals.
Silver (XAG/USD) dives on Wednesday, nearing two-month lows around the $60.00 psychological area after rejection from levels near $62.00 on Tuesday. A combination of rising Oil prices, higher long-term US Treasury yields and a firmer US Dollar ahead of the FOMC Minutes release of the latest Federal Reserve (Fed) meeting is weighing heavily on precious metals.
The return for the US 30-year Treasury note has reached a fresh multi-decade high above 5.70% on Wednesday, while the benchmark US 10-year yield has bounced up above 5.30%, retracing Tuesday’s pullback and nearing 24-year highs at 5.34%. Investors are growing cautious ahead of a closely watched 10-year Treasuries auction later on Wednesday, and the release of the central bank's minutes.
The Fed raised rates for the first time in three years at its September meeting and hinted at further hikes ahead. The decision boosted hopes of back-to-back hikes, which have been fading gradually as recent US inflation and labour data have eased the urgency for immediate monetary tightening. Investors, however, remain confident that the bank will raise borrowing costs by at least a half percentage point in the next two quarters.
Technical Analysis: Support at $60 is likely to be tested again
XAG/USD trades at $60.13 at the time of writing, as bullish attempts have been unable to find acceptance above the bottom of the previous trading range, in the $62.15 area. This leaves the bearish structure in play, with momentum indicators on the 4-hour chart supporting the negative view as the Relative Strength Index (14) dips below 40 and the Moving Average Convergence Divergence (MACD) slips below zero.
Immediate price action suggests that the mentioned $60.00 support area will be tested again. A confirmation below here would expose the late July and early August lows near $56.50. On the topside, bulls would have to break a previous support area between $62.15 and $62.25 (near August 18 and September 14 and 16 lows) to ease bearish pressure and shift the focus towards the September 25 high in the $65.00 area.
(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.