Silver Price Forecast: Is $50 in sight as bearish pressure intensifies?

Can Silver stem its losses as investors prefer government bonds to precious metals?
Persistent bearish momentum leaves XAG/USD exposed to additional declines.
Sellers target the psychological $50 level as RSI nears oversold conditions.

Selling pressure pushes Silver (XAG/USD) to new yearly lows on Friday, with investors seeking safety in government bonds rather than the precious metal. The move follows Thursday’s 5.8% slump, when worries about AI-related investments dragged equities lower without generating safe-haven demand for Silver. Some traders may also be liquidating precious metals to cover stock market losses. Silver is trading near $53.89 at the time of writing and is heading for its second successive weekly fall.

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Roughly 55% has now been wiped off the white metal’s value since its January high near $121. Much of the sell-off stems from higher energy costs associated with the Middle East war that started in late February. These costs have intensified inflationary pressures, prompting major central banks, particularly the Federal Reserve (Fed), to increase interest rates. As borrowing costs rise, so does the opportunity cost of owning assets such as Silver that offer no yield.

Whether Silver’s slide continues or gives way to a rebound could hinge on next week’s Fed meeting. Following a 25 basis points (bps) increase in September, the US central bank is widely expected to keep rates on hold. Still, another hike before year-end could remain an option as policymakers seek to bring inflation back to the 2% target. According to the CME FedWatch Tool, markets assign an 80% probability to a December rate increase.

Can Silver find support as bearish technical signals persist?

A firmly bearish near-term outlook remains evident on the XAG/USD daily chart: the pair is falling further below the descending channel’s lower boundary while trading well beneath both the 100-day Simple Moving Average (SMA) and the 200-day SMA.

The momentum indicators support this bearish assessment. At 31, the Relative Strength Index (RSI) is close to oversold territory, while the Moving Average Convergence Divergence (MACD) remains in negative territory below zero. An Average Directional Index reading of 30 points to a weak underlying trend.

Any recovery first faces resistance at $55, followed closely by the breached lower channel boundary near $56.50 and then the horizontal ceiling at $60. Further up, the bearish channel’s upper boundary and the 100-day SMA at $62 create a cluster of resistance before the $67 swing high. The 200-day SMA at $71 is the final upside barrier.

With significant support appearing only at the $50 horizontal level, XAG/USD remains exposed to additional losses for as long as it trades below the cluster of overhead resistance levels.

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

Common questions about Silver

What attracts investors to Silver?

Investors actively trade Silver, a precious metal with a long history as both a store of value and a means of exchange. While Gold enjoys greater popularity, traders may choose Silver for its intrinsic value, to diversify their portfolios or as a possible hedge when inflation is high. Exposure can come through physical purchases of coins or bars, or through instruments such as Exchange Traded Funds that track Silver’s international market price.

What drives changes in Silver prices?

Several forces shape Silver prices. Its safe-haven appeal can lift prices during geopolitical turmoil or concerns about a severe recession, though this effect is less pronounced than for Gold. Lower interest rates generally support Silver because it pays no yield. The US Dollar (USD) is another key influence, given that Silver is quoted in dollars (XAG/USD): a stronger Dollar usually restrains prices, while a weaker Dollar is likely to lift them. Investment demand, recycling rates and mine supply can also influence prices, with Silver far more abundant than Gold.

How important is industrial demand for Silver prices?

Among metals, Silver has one of the highest levels of electrical conductivity, exceeding both Copper and Gold. This makes it widely used in industrial applications, especially electronics and solar energy. Stronger demand can push prices higher, whereas weaker demand generally weighs on them. Economic developments in the US, China and India can also drive price fluctuations. Large industrial sectors in the US and, in particular, China use Silver across various processes, while Indian consumers’ demand for Silver jewellery is also an important influence on prices.

Why does Silver often follow Gold prices?

Gold’s price movements often set the direction for Silver. A rise in Gold is typically accompanied by gains in Silver, reflecting their similar safe-haven status. To assess their relative valuations, investors may use the Gold/Silver ratio, which measures how many ounces of Silver are equivalent in value to one ounce of Gold. A high reading may be interpreted by some investors as a sign that Silver is undervalued or Gold is overvalued. Conversely, a low reading could indicate that Gold is undervalued compared with Silver.