Silver Price Forecast: Bearish trend persists despite XAG/USD regaining $50 as Oil slides

Silver advances over 3.5%, supported by weaker Oil prices amid US-Iran diplomatic signals.
Trading below major moving averages leaves XAG/USD’s bearish outlook unchanged.
An RSI rebound out of oversold territory contrasts with ADX readings that signal a powerful downtrend.

Silver (XAG/USD) is trying to recover on Monday, supported by a fall of more than 5% in Oil prices after encouraging diplomatic signals from the US and Iran. The rebound follows Friday’s slide to a fresh yearly low of $48.47. At the time of writing, the metal is trading around $51, a gain of 3.80% for the day.

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

Silver’s recovery is drawing support from easing inflation concerns as Oil prices retreat. This has allowed US Treasury yields to continue their recent fall following the sell-off in technology stocks, while putting further pressure on the US Dollar (USD).

Whether Silver can extend its gains depends on diplomacy delivering a sustained fall in Oil prices. A steeper decline in Oil is by no means certain: the diplomatic outlook remains unclear, and both Washington and Tehran continue to keep military options open.

Without such a decline, high energy costs could keep inflation risks in the spotlight and maintain the Federal Reserve’s (Fed) hawkish policy stance. Since Silver offers no yield, higher interest rates raise the opportunity cost of holding the metal.

Can Silver’s Rebound Overcome the Bearish Technical Outlook?

A bearish bias persists on the daily XAG/USD chart, with the price below the 21-day Simple Moving Average (SMA) at $56, the 100-day SMA at $61 and the 200-day SMA at $70. Trading beneath all these major trend indicators points to a broader corrective phase. Meanwhile, after briefly entering oversold territory, the Relative Strength Index (RSI) is hovering near 31.

Despite momentum being close to oversold levels, the prevailing downtrend still appears strong: the Average Directional Index (ADX) is rising near 42. The Moving Average Convergence Divergence (MACD), meanwhile, remains below zero with a weak line.

Any advance would first encounter resistance at $52, followed by a more significant barrier at $55. The 21-day SMA at $56 adds to this supply zone. Beyond it, the 100-day SMA at $61 presents a hurdle to a more extensive recovery, ahead of the earlier horizontal ceiling at $67 and the longer-term 200-day SMA at $70.

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

(An AI tool assisted in preparing this story’s technical analysis. Find out more.)

Common Questions About Silver

What attracts investors to Silver?

Widely traded by investors, Silver is a precious metal that has long served both as a store of value and a means of exchange. Gold remains more popular, but traders may choose Silver for portfolio diversification, its intrinsic value or its potential to hedge against high inflation. Exposure can be gained by purchasing physical Silver as coins or bars, or by trading instruments such as Exchange Traded Funds that track its international market price.

What drives changes in Silver prices?

Several influences can drive Silver prices. Its safe-haven status means geopolitical turmoil or concerns about a severe recession can push prices higher, though the effect is smaller than for Gold. Lower interest rates also tend to support Silver because it offers no yield. As the metal is quoted in US dollars (XAG/USD), movements in the US Dollar (USD) are another important influence: Dollar strength tends to restrain Silver prices, while a weaker Dollar is likely to lift them. Prices can also respond to investment demand, recycling rates and mine supply, with Silver far more abundant than Gold.

Why does industrial demand matter for Silver prices?

With electrical conductivity among the highest of all metals, exceeding that of Copper and Gold, Silver has extensive industrial applications, notably in electronics and solar energy. A sharp rise in demand can lift prices, whereas falling demand tends to depress them. Developments in the US, Chinese and Indian economies can also influence price fluctuations. Large industrial sectors in the US and, especially, China consume Silver across various processes. In India, consumer demand for Silver jewellery is another important factor in determining prices.

Why do Silver prices often track Gold?

Because both metals share safe-haven characteristics, Silver generally moves in line with Gold and typically rises when Gold prices climb. Their relative valuations may be assessed using the Gold/Silver ratio, which measures how many ounces of Silver equal the value of one ounce of Gold. A high ratio may be interpreted by some investors as a sign that Silver is undervalued or Gold overvalued. A low reading, by contrast, might indicate that Gold is undervalued compared with Silver.