Silver Price Forecast: XAG/USD sets for third straight negative weekly close
- Silver price trades calmly near $72.80, but is set for a third straight negative closing.
- Higher oil prices due to Iran conflicts have de-anchored inflation expectations.
- Global central banks are unlikely to make dovish monetary policy adjustments in the near term.
Silver price (XAG/USD) trades in a tight range around $72.80 during the European trading session on Friday. The white metal holds onto Thursday’s recovery move, which was driven by weakness in the US Dollar (USD). Technically, a lower US Dollar makes the Silver price an attractive risk-reward trade for investors.
On a broader note, the precious metal is uncertain and looks set to end the week on a negative note. This would be the third straight negative closing.
Silver price remains under pressure this week as global inflation expectations have de-anchored due to higher oil prices in the wake of the war in the Middle East, which involves the United States (US), Israel, and Iran. Oil prices gained sharply as Iran closed the Strait of Hormuz, as part of retaliation against the joint assault by the US and Iran, through which 20% of global oil is shipped.
In addition to the closure of the Strait of Hormuz, attacks from Iran and Israel on several energy facilities in the Middle East have prompted energy supply concerns, which have eventually contributed to higher energy prices.
Meanwhile, global central banks have also warned of energy-linked upside inflation risks and have argued against reducing interest rates in the near term.
Theoretically, signals of an extended pause by various central banks on the monetary policy outlook diminish the appeal of non-yielding assets, such as Silver.
Federal Reserve (Fed) Chair Jerome Powell said in the post-monetary policy meeting conference on Wednesday. “Higher energy prices will push up inflation in the near term, but the effects remain uncertain,” Powell said.
Silver technical analysis
XAG/USD trades flat at around $72.80 at the press time. The near-term bias is bearish as price extends its decline below the 20-day Exponential Moving Average (EMA), which now tracks above spot and acts as dynamic resistance near $81.22. The sequence of lower closes from the mid-$90s to the low-$70s underscores persistent selling pressure, while the RSI slipping below 40.00 for the first time in 11 months is confirming downside momentum without reaching oversold territory. This setup keeps sellers in control unless the price can recover and stabilize back above the broken average.
Immediate resistance appears at $76.50, where a prior reaction high aligns with the descending short-term structure, followed by a stronger barrier around $81.00, capped by the 20-day exponential moving average. A sustained break above $81.00 would weaken the current bearish tone and open a move toward the $84.00 area. On the downside, initial support is located at round-level $70, followed by Thursday's low of $65.51.
(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.