Silver Price Forecast: XAG/USD plunges below $73 amid caution ahead of Fed’s policy
- Silver price plummets below $73 ahead of the Fed’s monetary policy announcement.
- Investors expect the Fed to hold interest rates steady for the third time in a row.
- The US Dollar recovers ahead of the Fed’s monetary policy.
Silver price (XAG/USD) is down almost 3% below $73.00 during the European trading session on Tuesday. The white metal faces intense selling pressure as investors turn cautious ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
Market participants expect the Fed to leave interest rates unchanged in the range of 3.50%-3.75% for the third meeting in a row as consumer inflation expectations remain de-anchored in the wake of higher energy prices.
As the Fed is widely anticipated to maintain the status quo, investors will pay close attention to the monetary policy statement and Chairman Jerome Powell’s press conference to get fresh cues on the interest rate outlook.
The CME Fedwatch tool shows that the odds of the Fed keeping borrowing rates at their current levels are 76.7% while the rest supports an interest rate cut.
Meanwhile, a slight recovery in the US Dollar (USD) after a vertical decline on Monday is also acting as key drag on the Silver price. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 98.75.
Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
Silver technical analysis
XAG/USD trades sharply lower at around $72.90, keeping a bearish near-term bias as price holds below the 20-day Exponential Moving Average (EMA) at roughly $76.22. The location of the spot beneath this short-term EMA suggests rallies remain capped for now, while the Relative Strength Index (RSI) around 42 leans to the downside without yet signaling oversold conditions, hinting that sellers still have room to press the move.
On the topside, initial resistance is defined by the 20-day EMA near $76.22, and a daily close above this barrier would be needed to ease the immediate downside pressure and open the door to a deeper recovery towards the April 17 high at $83.06. Looking down, the April 7 low at $68.28 and the four-month low near $61 are key support areas.
(The technical analysis of this story was written with the help of an AI tool.)
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.