Silver Price Forecast: XAG/USD rallies to near $66.80 amid correction in oil prices, US yields
- Silver price rises further to near $66.80 as both US Treasury Yields and oil prices correct.
- Hawkish repricing of Fed’s interest rate expectations has weighed on US bond yields.
- Oil prices have corrects as Saudi Arabi confirms exploring ways to ship energy.
Silver price (XAG/USD) extends its upside on Friday, trading 2.26% higher at around 66.80 during the European session. The white metal strengthens due to correction in oil prices and United States (US) Treasury Yields.
The WTI Oil price has corrected to near $95.30 from an almost four-month high of $102.11 as Saudi Arabia confirms mulling ways to export energy. Lower oil prices ease fears of high inflation expectations, a scenario that diminishes fears of interest rate hikes from central banks, which improves the appeal of non-yielding assets, such as Silver.
Additionally, some relief from rising US Treasury Yields due to a pause in the oil rally and hawkish repricing of Federal Reserve (Fed) interest rate expectations has also strengthened the Silver price.
According to TD Securities, a combination of "already-hawkish Fed pricing, increased inflation-fighting credibility, and worries about higher rates impacting growth, should help keep 10-year yields contained."
As of writing, 10-year US Treasury Yields trade close to ongoing week’s low near 4.94% after hitting a 19-year high of 5.04% on Tuesday.
Meanwhile, a firm US Dollar due to a sharp increase in hawkish Fed bets could limit the upside in the Silver. At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is flat but close to its over six-week high of 100.37 posted this week.
Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $66.72, holding a bullish near-term bias as price remains above the 20-day Exponential Moving Average (EMA) at $65.15. The location of spot above this key trend metric suggests underlying demand is still in control, while the Relative Strength Index (RSI) at 54.97 stays in neutral-to-positive territory, hinting that bullish momentum is constructive but not overstretched.
On the downside, immediate support is seen at the 20-day EMA around $65.15, which reinforces the recent breakout area and would be expected to attract buyers on shallow pullbacks. On the upside, the white metal needs a decisive break above the September 9 high of $68.33 to revisit the three-month high at $71.12.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
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.
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.
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.
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.