$54.00 gives way: Silver Price Forecast as XAG/USD retreats towards 11-month lows

Bargain-hunting and lower crude oil prices could help Silver stabilise.
Near-term inflation worries ease temporarily as Iran, Saudi Arabia, Pakistan, and Turkey hold security discussions.
An October Fed rate hold is priced in by markets, with policy decisions from the ECB, BoJ, and BoC also approaching.

Silver (XAG/USD) trades around $53.80 per troy ounce in Tuesday’s Asian session. The metal has slipped after modest gains the previous day and remains close to Monday’s 11-month low of $53.01. High energy prices continue to highlight inflation risks, supporting expectations of additional monetary tightening and weighing on non-yielding Silver. Lower oil prices and bargain-hunting before the Federal Reserve’s (Fed) forthcoming policy decision could, however, cushion further losses.

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

Renewed diplomacy aimed at easing US-Iran tensions has pushed crude oil prices lower, helping to temper immediate inflation worries. According to Islamic Republic of Iran Broadcasting (IRIB), Iran, Saudi Arabia, Pakistan, and Turkey agreed on Monday to sustain security discussions and strengthen regional cooperation after high-level talks in Tehran. Following the initial meeting between Iran and senior officials representing the Mecca Joint Defence Agreement, a joint statement said all four countries had agreed to continue dialogue and consultations on regional peace, security, and stability.

An 89.5% probability of an October rate hold and an 82.3% chance of a December increase are currently reflected in market pricing, according to the CME FedWatch Tool. Financial markets expect the Federal Reserve to leave rates unchanged at its forthcoming October meeting, with another increase potentially following in December. Elsewhere, the European Central Bank (ECB) and Bank of Japan (BoJ) are also expected to maintain their key rates. The Bank of Canada (BoC), by contrast, is forecast to raise rates by 25 basis points this week.

Technical Analysis: Silver approaches oversold levels

At $53.80 on the daily chart, XAG/USD retains a bearish short-term outlook below its nine- and 50-day Exponential Moving Averages (EMAs). This EMA configuration points to overhead resistance that is likely to constrain rebounds. Meanwhile, the 14-day Relative Strength Index (RSI) stands at 31.06, close to oversold territory. That reading suggests downside momentum is stretched, but a reversal has yet to emerge. With the FXS Fed Sentiment Index consolidating near 127.51, expectations of tight monetary policy continue to underpin a cautious environment for silver.

The nine-day EMA at $55.74 provides the first upside hurdle, followed by more substantial resistance at the 50-day EMA near $60.74. A break above the latter would be required to soften the prevailing bearish outlook. This dataset offers no clear technical support immediately below the current price, leaving the metal exposed to additional losses. Buyers would first need to recover the short-term EMA cluster to signal stabilisation on the daily chart.

Chart Analysis XAG/USD — XAG/USD: Daily Price Chart

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

Silver: Frequently Asked Questions

What attracts investors to Silver?

Widely traded by investors, Silver has long served as both a store of value and a medium of exchange. It attracts less interest than Gold, but traders may use it to diversify portfolios, gain exposure to its intrinsic value or potentially hedge against high inflation. Physical holdings can take the form of coins or bars. Alternatively, investors can gain exposure through instruments such as Exchange Traded Funds that track Silver’s price in international markets.

What drives movements in Silver prices?

A broad range of influences can affect Silver prices. Its safe-haven role means geopolitical turmoil or concern over a severe recession can lift prices, although the effect is generally smaller than for Gold. Lower interest rates also tend to support Silver because it offers no yield. Since the metal is quoted in US Dollar (USD) terms as XAG/USD, currency movements matter too: a firmer Dollar usually restrains Silver prices, while a weaker Dollar is likely to lift them. Investment demand, mine supply and recycling rates are further price drivers. Silver is far more abundant than Gold.

What role does industrial demand play in Silver pricing?

Among metals, Silver has one of the highest levels of electrical conductivity, exceeding both Copper and Gold. This makes it widely used in industry, notably electronics and solar energy. Rising demand can push prices higher; falling demand tends to depress them. Economic conditions in the US, China and India can also generate price fluctuations. Large industrial sectors in the US and especially China consume Silver across a range of processes, while Indian consumers’ demand for Silver jewellery is another important influence on pricing.

How closely does Silver track Gold prices?

Gold and Silver share similar safe-haven characteristics, so Silver generally tracks Gold’s direction and typically advances when Gold rises. Their relative valuations may be assessed using the Gold/Silver ratio, which measures how many ounces of Silver match the value of one ounce of Gold. A high reading may be interpreted by some investors as Silver being undervalued or Gold being overvalued. A low reading, conversely, may indicate that Gold is undervalued compared with Silver.