Silver Price Forecast: XAG/USD consolidates below $80.00 in countdown to Fed’s policy

熱門文章

Silver price (XAG/USD) trades in a confined range below $80.00 during the European trading session on Wednesday. The white metal consolidates as investors await the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

Silver price trades sideways below $80.00 as investors await the Fed’s monetary policy outcome.
The Fed is expected to hold interest rates steady in the near term.
Iran’s Araghchi stated that Tehran still intends to build nuclear weapons.

According to the CME FedWatch tool, traders are confident that the Fed will leave interest rates unchanged in the current range of 3.50%-3.75%. The tool also shows that the Fed is unlikely to cut interest rates before the September policy meeting. Also, the odds of an interest rate cut in the same meeting are slightly over 50%.

Theoretically, the Fed holding interest rates steady for a longer term is an unfavorable scenario for non-yielding assets, such as Silver.

Speculation that the Fed will hold borrowing rates steady for longer has been intensified due to higher oil prices amid conflicts in the Middle East, which involve the United States (US), Israel, and Iran.

Meanwhile, Middle East conflicts are expected to limit the downside in the Silver price. Safe-haven assets, such as Silver, tend to perform better in a heightened geopolitical environment.

Conflicts in the Middle East are expected to escalate further as Iran’s foreign minister Abbas Araghchi has stated in an interview with Al Jazeera that Tehran won’t give up its ambition of building nuclear weapons.

Silver technical analysis

On the four-hour chart, XAG/USD trades in a Descending Triangle chart pattern around $78.50, which signifies a sharp volatility contraction. The downward-sloping border placed from the March 1 high of $96.62 is capping the upside near $84.00. Meanwhile, the downside has been limited by the horizontal support plotted from the March 3 low around $78.00.

The near-term bias is bearish as price holds beneath the 20-period Exponential Moving Average (EMA), which is rolling over near $80.56. The series of lower highs from above $96.00 reinforces a downside structure, while the 14-period RSI consistently wobbles near 40.00, showing persistent weak momentum without oversold relief, keeping selling pressure in control.

Initial resistance is located at the 20-period EMA near $80.56, followed by the downward-sloping border around $84.00. A sustained break above the latter would challenge the bearish bias and open the way toward the $86.00 area. On the downside, the price could slide to the February 17 low around $72.00 if it breaks decisively below the March 16 low around $77.00.

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

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.