Silver Price Forecast: XAG/USD consolidates around $58 as Fed’s policy comes into spotlight

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Silver price (XAG/USD) trades in a tight range around $58.00 during the late Asian trading session on Tuesday. The white metal turns sideways as investors await the monetary policy announcement by the Federal Reserve (Fed), scheduled for Wednesday.

Silver price trades sideways around $58.00 as investors await the Fed’s monetary policy announcement.
The Fed is expected to cut interest rates by 25 bps on Wednesday.
Investors await the US JOLTS Job Openings data for fresh cues on the current status of labour demand.

The CME FedWatch tool shows that the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December policy meeting is 89.4%.

Lower interest rates by the Fed bode well for non-yielding assets, such as Silver.

Fed dovish expectations have been prompted by cooling job growth. New York Fed Bank President John Williams also warned of slower economic growth and weak labour demand in his speech in late November, while supporting the need for more interest rate cuts. "Economic growth has slowed, and the labor market gradually cooled," Williams said, adding that there is room for a further adjustment in the near term.” William’s dovish interest rate guidance also led to a significant jump in the Fed’s monetary easing expectations.

For more cues on the United States (US) labour market conditions, investors await the JOLTS Job Openings data for October, which will be published at 15:00 GMT. Economists expect US employers to have posted 7.2 million fresh jobs in that period.

Silver technical analysis

XAG/USD trades in a tight range between $56.58 and $59.34 for over a week. The 20-day Exponential Moving Average (EMA) is rising and supports the advance, currently at $54.73, with price holding comfortably above it.

The 14-day Relative Strength Index (RSI) at 68 (near overbought) shows firm momentum, though it has eased from recent peaks, suggesting upside may slow without invalidating the trend.

Trend conditions remain bullish while the 20-EMA continues to climb, and pullbacks would stay shallow as long as the pair holds above the average. If momentum cools further, RSI could drift toward the mid-60s before any deeper correction develops, whereas sustained elevated readings would keep the path of least resistance pointed higher.

(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.