Silver Price Forecast: XAG/USD recovers after US PCE data while bearish structure remains intact
- Silver trades on the back foot as renewed US-Iran attacks keep markets cautious.
- Energy-driven inflation concerns continue to limit upside in the white metal.
- Technically, XAG/USD trades with a soft bearish bias while momentum indicators remain subdued.
Silver (XAG/USD) recovers on Thursday as the US Dollar (USD) eases following the latest US Personal Consumption Expenditures (PCE) data. At the time of writing, XAG/USD is trading around $734.11, rebounding after hitting a one-month low near $71.79 earlier in the day.
The core PCE Price Index, the Federal Reserve’s (Fed) preferred inflation gauge, rose 0.2% MoM in April, below market expectations and down from the 0.3% increase recorded in March. Meanwhile, the annual Core PCE reading accelerated to 3.3% YoY from 3.2% in March, matching market expectations.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 99.15 after hitting a seven-week high of 99.54 earlier in the day.
Meanwhile, fresh attacks in the Middle East region have dashed hopes for a quick end to the war, keeping Oil prices elevated amid ongoing supply disruption through the Strait of Hormuz.
The precious metal’s upside remains limited in the current macro environment. Even with the DXY pulling back slightly during the day, traders are still favoring the US Dollar (USD) for safety, which is keeping pressure on Dollar-denominated commodities.
Meanwhile, rising expectations that the Fed could raise interest rates to tackle energy-driven inflation are adding further pressure on non-yielding assets such as Silver.
Technical Analysis:
On the daily chart, XAG/USD maintains a mildly bearish near-term tone, holding below the 20-period Bollinger Simple Moving Average (SMA) around $78 and well under the upper band near $86.76, which together suggest rallies are being capped by overhead supply.
Price still sits comfortably above the lower Bollinger band at about $69.29, but a soft Relative Strength Index (RSI) at 44 and a very low Average Directional Index (ADX) near 12 hint at downside momentum within a weakly trending environment.
On the topside, initial resistance is defined by the 20-period Bollinger SMA around $78, with a subsequent barrier at the upper band near $86.76 if buyers regain traction.
On the downside, immediate support emerges at the lower Bollinger band around $69.29, ahead of a more substantial horizontal floor near $60.00, where a deeper correction could seek stabilization if bearish pressure extends.
(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.