Silver Price Forecast: XAG/USD struggles around 20-day EMA as Fed to hold rates steady for longer

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Silver price (XAG/USD) trades flat at around $73.70 during the European trading session on Friday.

Silver price wobbles around $73.70 in the countdown to Fed speeches.
Three Fed officials called for a shift from easing bias in the policy meeting on Wednesday.
Higher oil prices are expected to keep the Silver price under pressure.

Silver price (XAG/USD) trades flat at around $73.70 during the European trading session on Friday. The white metal consolidates as investors await clarity on the United States (US) interest rate outlook, for which investors will focus on speeches from Federal Reserve (Fed) officials who are allowed to speak on the monetary policy, following the completion of the blackout period after the policy announcement on Wednesday.

In the policy meeting, the Fed decided to leave interest rates unchanged in the range of 3.50%-3.75%, as expected. Fed Chair Jerome Powell stated in the press conference that four members of the rate-setting committee dissented from the hold decision, of which three called for a move away from the easing bias.

Currently, the CME FedWatch tool shows that the Fed will hold interest rates steady at their current levels by the year-end.

Theoretically, the Fed maintaining the status quo for longer limits the upside in non-yielding assets, such as Silver.

Meanwhile, de-anchored global inflation expectations due to higher energy prices in the wake of Middle East conflicts, a scenario that discourages central banks from easing monetary conditions, are likely to keep the Silver price under pressure.

In the European trade, the WTI Oil price trades 0.5% higher above $103 due to the prolonged closure of the Strait of Hormuz, a vital passage to almost 20% of global energy supply.

Silver technical analysis

XAG/USD trades almost flat at around $73.70 as of writing, The near-term bias is bearish as it holds below the 20-period Exponential Moving Average (EMA) at $75.38. The downside break under this dynamic barrier keeps the metal under corrective pressure, while the Relative Strength Index (RSI) at 44.48 leans slightly negative but not oversold, suggesting selling pressure persists without being extreme.

On the topside, immediate resistance is located at the 20-period EMA around $75.38, and a sustained close above this level would be needed to ease the current bearish tone and open the door to a more constructive recovery towards $80.00. On the downside, the metal could slide towards the April 7 low of $68.28 if it slides below the April 29 low of $70.86.

(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.