Silver Price Forecast: Why is XAG/USD sliding towards 11-month lows after dropping below $54.00?

Support from bargain-hunting and softer crude oil prices may help Silver stabilise.
Near-term inflation worries ease temporarily as Iran, Saudi Arabia, Pakistan, and Turkey hold security discussions.
An October Fed rate hold is expected by markets, with policy decisions from the ECB, BoJ, and BoC also ahead.

Selling pressure has returned to Silver (XAG/USD) following the previous day’s modest gains, leaving the metal trading around $53.80 per troy ounce in Tuesday’s Asian session. The non-yielding asset remains close to Monday’s 11-month low of $53.01. High energy prices continue to draw attention to inflation risks and underpin expectations of additional monetary tightening. Nevertheless, cheaper oil and bargain-hunting before the Federal Reserve’s (Fed) forthcoming policy announcement could provide some support and temper the white metal’s downside pressure.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Renewed diplomacy aimed at easing US-Iran tensions has weighed on crude oil prices, helping to reduce immediate inflation worries. According to Islamic Republic of Iran Broadcasting (IRIB), high-level discussions in Tehran led Iran, Saudi Arabia, Pakistan, and Turkey to agree on Monday to carry on security talks and strengthen regional cooperation. After the initial meeting between Iran and senior officials representing the Mecca Joint Defence Agreement, a joint statement said the four countries had agreed to sustain dialogue and consultations centred on regional peace, security, and stability.

An unchanged Federal Reserve policy rate at the forthcoming October meeting remains the financial markets’ expectation, with another increase potentially following in December. Pricing tracked by the CME FedWatch Tool puts the probability of an October pause at 89.5% and the likelihood of a December rate increase at 82.3%. Elsewhere, the European Central Bank (ECB) and Bank of Japan (BoJ) are also set to hold their key rates steady. The Bank of Canada (BoC), by contrast, is expected to raise rates by 25 basis points this week.

Technical Analysis: Is Silver Approaching Oversold Territory?

Trading at $53.80 on the daily chart, XAG/USD retains a bearish near-term outlook because it remains below the nine- and 50-day Exponential Moving Averages (EMAs). These overhead moving averages suggest that any rallies are likely to face a ceiling. At 31.06, the 14-day Relative Strength Index (RSI) is close to oversold territory, signalling stretched downside momentum without evidence of a reversal yet. Meanwhile, consolidation in the FXS Fed Sentiment Index around 127.51 adds to the cautious environment for Silver as expectations of tight monetary policy persist.

The nine-day EMA at $55.74 provides the first upside resistance, followed by a more substantial hurdle at the 50-day EMA near $60.74. A break above the latter would be required to soften the prevailing bearish outlook. This dataset shows no clear technical support immediately below the current price, leaving the metal exposed to additional losses. Buyers would need to regain the short-term EMA cluster to provide the daily chart’s first indication of stabilisation.

Chart Analysis XAG/USD — XAG/USD: What Does the Daily Chart Show?

(The technical analysis of this story was written with the help of an AI tool. Find out more.)

Silver: Common Questions Answered

What attracts investors to Silver?

Actively traded by investors, Silver is a precious metal with a long history as both a store of value and a means of exchange. Gold attracts greater interest, but traders may choose Silver for its intrinsic value, to diversify an investment portfolio, or as a possible hedge when inflation is high. Physical holdings can take the form of Silver coins or bars. Alternatively, investors can trade instruments such as Exchange Traded Funds that follow the metal’s price in international markets.

What drives changes in Silver prices?

A broad mix of influences can drive Silver prices. Its safe-haven appeal may lift prices during geopolitical turmoil or fears of a severe recession, though the effect is generally smaller than for Gold. Lower interest rates also tend to support Silver, which offers no yield. As the metal is quoted in US Dollars (USD) through XAG/USD, movements in the currency matter too: Dollar strength generally restrains Silver prices, while a weaker Dollar is likely to lift them. Investment demand, the supply from mining, and recycling rates are further influences on prices, with Silver considerably more abundant than Gold.

Why does industrial demand matter for Silver prices?

Among metals, Silver has one of the highest levels of electrical conductivity, exceeding both Copper and Gold, which makes it widely used in industries such as electronics and solar energy. Stronger demand can push prices higher, whereas weaker demand tends to weigh on them. Developments in the US, Chinese and Indian economies can also generate price fluctuations. Large industrial sectors in the US and, especially, China employ Silver in a range of processes. In India, consumer demand for Silver jewellery is another important factor in determining prices.

How do Gold price movements influence Silver?

Gold’s price direction is usually mirrored by Silver. Gains in Gold are typically accompanied by an increase in Silver prices, reflecting their similar safe-haven status. Relative valuations can be assessed using the Gold/Silver ratio, which measures how many ounces of Silver equal the value of one ounce of Gold. A high reading may be interpreted by some investors as a sign that Silver is undervalued or Gold is overvalued. A low reading, in contrast, could indicate that Gold is undervalued compared with Silver.