Silver Price Forecast: XAG/USD regains $50 amid Oil sell-off, with bearish trend intact

• Oil prices fall on US-Iran diplomatic signals, lifting Silver by over 3.5%.
• Trading beneath its key moving averages, XAG/USD retains a bearish bias.
• Despite the RSI’s recovery from oversold levels, the ADX signals that the downtrend remains strong.

Oil prices have dropped more than 5% following encouraging diplomatic signals from the US and Iran, helping Silver (XAG/USD) attempt a recovery on Monday. The metal had fallen to a new yearly low of $48.47 on Friday. XAG/USD is trading at around $51 at the time of writing, a gain of 3.80% for the day.

According to ISNA, Iranian President Masoud Pezeshkian said the Supreme Leader had given the government certain powers over negotiations. That followed an earlier Axios report that US President Donald Trump favours allowing more time for diplomacy with Iran.

With cheaper Oil easing inflation worries, US Treasury yields are extending the recent decline that followed the sell-off in technology shares. This is putting further pressure on the US Dollar (USD), with the combined moves underpinning Silver’s rebound.

Further substantial falls in Oil prices are by no means certain, however. The prospects for diplomacy remain unclear, and both Washington and Tehran continue to leave military options open. Whether diplomatic efforts bring about a sustained drop in Oil prices will therefore determine Silver’s scope for further gains.

Without that outcome, high energy costs could sustain concerns over inflation and keep the Federal Reserve (Fed) on a hawkish course. As Silver generates no yield, higher interest rates raise the opportunity cost of holding it.

XAG/USD retains a bearish technical bias

Trading below the 21-day Simple Moving Average (SMA) at $56, the 100-day SMA at $61 and the 200-day SMA at $70, XAG/USD continues to show a bearish bias on the daily chart. Its position beneath all the main trend indicators points to a broader corrective phase. Meanwhile, the Relative Strength Index (RSI) is near 31, having briefly entered oversold territory.

A weak Moving Average Convergence Divergence (MACD) line remains below zero. At the same time, the Average Directional Index (ADX) is rising near 42, indicating that the established downtrend remains strong even with momentum close to oversold levels.

Initial upside resistance lies at $52, followed by a more significant obstacle at $55. The 21-day SMA at $56 adds weight to this supply zone. Beyond it, the 100-day SMA at $61 stands in the way of a more extended recovery, ahead of the previous horizontal ceiling at $67 and the longer-term 200-day SMA at $70.

Friday’s low near $48.87 provides the nearest downside support; a break below it would open the way to further losses. However, with the RSI increasingly oversold and the ADX signalling a strong trend, a decline towards this floor could begin to draw short-covering rather than renewed aggressive selling.

(An AI tool assisted in preparing the technical analysis in this article. Find out more.)