Silver Price Forecast: XAG/USD jumps to near $37 amid drop in US Dollar, bond yields
- Silver price capitalizes on a lower US Dollar, US Treasury Yields.
- Investors keenly await the US PPI and CPI data for August.
- The US headline CPI is expected to remain stronger due to elevated energy prices.
Silver price (XAG/USD) is up 1.25% to near $67.00 during the Asian trading session on Tuesday. The white metal strengthens as the US Dollar (USD) and United States (US) Treasury Yields come under pressure, with investors shifting their focus to the Consumer Price Index (CPI) data of August scheduled for Friday.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 98.83 even after recovering some of its early losses. 10-year US Treasury Yields are down 0.17% to near 4.77%.
Lower US bond yields result in an improvement in the appeal of non-yielding assets, such as Silver.
Investors will pay close attention to the US CPI data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
TD Securities sees core inflation contained even as headline CPI firms
According to TD Securities, the August CPI report is likely to show that “underlying inflation stayed under control,” with core prices “rising 0.19% m/m (2.3% y/y).” The bank expects the “services segment” to be the main driver of gains, while “core goods prices likely acted as a drag by posting a modest m/m drop.”
In contrast, TD looks for “headline CPI” to post “a stronger 0.37% m/m (3.4% y/y) due to rising energy prices and a slight pickup in food inflation.” The bank also cautions that “risks to our forecasts” are “skewed to the upside,” noting that its projections assume “a number of large price declines in tariff-exposed goods categories, including apparel and household goods.”
Before the US consumer inflation data, investors will focus on the Producer Price Index (PPI) data of August, which will be released on Thursday.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $66.97. The pair holds a constructive near-term bias as price remains above the nine-day Exponential Moving Average (EMA) at $66.49, suggesting the recent pullback is being supported rather than reversed. The Relative Strength Index (RSI) around 55 keeps a mildly positive tone, hinting that bullish momentum is still intact without yet pushing into overbought territory.
On the downside, initial support is aligned with the nine-day EMA at $66.49, where a daily close below would hint at a deeper consolidation toward lower levels not yet defined by the present indicators. Looking up, the August high at $71.12 could act as key hurdle.
(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.
