Near $57.40: Silver Price Forecast as XAG/USD retreats amid broadly firm oil prices

$57.40 in sight as Silver slumps amid high oil prices.
Oil prices remain supported by Middle East tensions.
An interest rate hold is expected at the Fed’s policy meeting later this month.

Silver (XAG/USD) has fallen 1.1% to around $57.40. Selling pressure persists during Wednesday’s European session as rising oil prices fuel concerns over higher global inflation.

WTI Oil is trading slightly higher at around $98.25 at the time of writing. Tuesday’s five-week high of $101.05 remains close.

Energy supply risks continue to rise as Iran maintains attacks on oil tankers and threatens Saudi Arabia’s oil infrastructure. These risks are sustaining the premium in oil prices.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Growing concerns over Middle East supplies have driven oil prices higher, according to analysts at Danske Bank. Traders are increasingly cautious about "Red Sea shipping risks and threats to oil infrastructure in Saudi Arabia." The bank says prices "have gained more than 10% this month" because "intensifying hostilities involving Saudi Arabia and Iran-backed Houthi forces, as well as Russia and Ukraine's attacks on energy infrastructure raised supply risks further," adding to the market’s recent upward momentum.

Further inflationary pressure could strengthen expectations of an interest rate hike by the Federal Reserve (Fed). Such a scenario would lift yields on interest-bearing assets while reducing the appeal of non-yielding assets such as Silver.

For now, the CME FedWatch tool indicates that the Fed is expected to leave interest rates unchanged at its policy meeting later this month.

$59.66 EMA: Silver Technical Outlook

At $57.25 on the daily chart, XAG/USD remains beneath its 20-day exponential moving average (EMA) of $59.66. This keeps the short-term outlook bearish. As a dynamic resistance level above the price, the EMA could constrain rebounds for as long as Silver trades below it. A Relative Strength Index (RSI) reading of 38.77, below the neutral 50 threshold, points to persistent bearish momentum rather than an extreme oversold condition.

The first upside barrier is the 20-day EMA at $59.66. Only a sustained move above it would relieve immediate downward pressure. Below the current price, the low of $54.77 recorded on 17 July provides key support.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Silver: Key Questions

What attracts investors to Silver?

Widely traded by investors, Silver has historically served both as a store of value and as a means of exchange. Gold remains more popular, but traders may choose Silver for its intrinsic value, to diversify a portfolio or as a possible hedge against high inflation. Investment options include physical coins and bars, as well as instruments such as Exchange Traded Funds that track Silver’s price in international markets.

What drives changes in Silver prices?

Several forces shape Silver prices. Its safe-haven role can drive gains during geopolitical instability or concerns about a severe recession, though the effect is generally smaller than for Gold. Lower interest rates tend to support Silver because it pays no yield. The US Dollar (USD) is another influence: Silver is quoted in dollars (XAG/USD), so a stronger Dollar generally restrains prices, while a weaker currency is likely to lift them. Investment demand, mine supply and recycling rates also matter. Silver is far more abundant than Gold.

Industrial demand: How does it influence Silver?

With electrical conductivity among the highest of any metal, exceeding both Copper and Gold, Silver has extensive industrial applications, notably in electronics and solar energy. Rising demand can push prices higher; falling demand tends to pull them lower. Economic developments in the US, China and India can also trigger price fluctuations. Large industrial sectors in the US and, especially, China use Silver across various processes. In India, consumer demand for Silver jewellery is also an important price driver.

Gold and Silver: How are their price moves linked?

Gold’s price direction often sets the course for Silver. As both metals share safe-haven characteristics, gains in Gold are typically accompanied by gains in Silver. Their relative valuations can be assessed using the Gold/Silver ratio, which measures how many ounces of Silver equal the value of one ounce of Gold. A high ratio may signal to some investors that Silver is undervalued or Gold overvalued. Conversely, a low reading may indicate that Gold is undervalued compared with Silver.