Silver Price Forecast: XAG/USD rises above $57.50 amid safe-haven demand
- Stock selloff and falling bond yields boosted non-yielding Silver as investors sought safer assets.
- Escalating Middle East conflict and shipping disruptions in the Strait of Hormuz drove Silver's safe-haven appeal.
- CME FedWatch Tool indicates that markets price in a 92% chance of a December Fed rate hike.
Silver price (XAG/USD) extends its gains for the second consecutive day, trading around $57.80 per troy ounce during Asian hours on Friday. Silver prices advanced as a sharp selloff in equity markets triggered renewed safe-haven demand for precious metals. This capital flight into safer assets drove bond yields significantly lower, reducing the opportunity cost of holding non-yielding assets like Silver and offering broad support to the metal.
Adding to the bullish momentum, investors digested intensifying geopolitical risks in the Middle East. Tensions flared following escalating hostilities between Saudi Arabia and Iran-backed Houthi forces in Yemen, alongside an incident earlier in the week where an Iranian projectile struck and sank a Singapore-flagged container ship in the Strait of Hormuz.
Meanwhile, market participants continued to assess the Federal Reserve’s (Fed) monetary policy path, as recent robust US economic data bolstered expectations of tighter borrowing conditions. According to the CME FedWatch Tool, markets are currently pricing in a roughly 72% chance that the Fed will hold interest rates steady this month, while expectations for a rate increase in December have risen to 92%.
CTA short covering in rates spills over into precious metals
According to TD Securities, “CTAs are extremely active cross-asset today,” with “notable short-covering across the board in the rates complex.” This shift in positioning is “helping CTAs to reverse course on yesterday's large-scale gold selling,” while “silver, platinum and palladium are also all seeing CTA short covering,” easing some of the systematic pressure that has weighed on the precious metals space.
Technical Analysis:
In the daily chart, XAG/USD trades at $57.80, extending its decline below both the short-term and medium-term trend metrics, which keeps the near-term bias bearish. The price is currently under the nine- and 50-day Exponential Moving Averages (EMAs), suggesting that rebounds remain capped while the broader downswing persists. The 14-day Relative Strength Index (RSI) at 38.85 stays in low-neutral territory, hinting at lingering downside pressure but not yet extreme oversold conditions, while the latest FXS Fed Sentiment Index reading at 127.51 reinforces the idea that macro policy expectations still lean against precious metals.
On the topside, immediate resistance aligns with the nine-day EMA at $58.81, where any recovery would likely stall initially, followed by a more solid barrier at the 50-day EMA near $62.46 that defines the upper boundary of the current corrective phase. With no clear nearby support levels derived from the available indicators, traders may look to recent lows and psychological round figures as provisional floors, while the bearish bias is expected to hold as long as XAG/USD trades below the clustered moving average resistance.
(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.