Silver Price Forecast: Can XAG/USD Extend Its Partial Recovery as a Firm US Dollar Limits Gains?

Silver pares its losses following a new YTD low around $52.67.
A firm US Dollar continues to weigh on Silver prices.
The Fed’s policy decision, flash Q3 GDP and September PCE Price Index figures remain in focus for investors.

Silver price (XAG/USD) remains under pressure from a firm US Dollar (USD) ahead of Wednesday’s monetary policy announcement by the Federal Reserve (Fed). Although the white metal has recovered part of its losses after touching a fresh year-to-date (YTD) low near $52.67, it is still down 1%, trading around $53.45 during Tuesday’s European session.

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

At the time of writing, a 0.2% gain has taken the US Dollar Index (DXY) to around 102.25, its highest reading in 10 days. The index measures the Greenback against six major currencies. From a technical perspective, a stronger US Dollar makes Silver less attractive to investors on a risk-reward basis.

With the Fed expected to hold, what signals could emerge on a December hike?

A near-term pause remains the message from Fed funds futures, while Commerzbank analysts say the Fed is "widely expected to leave its policy rate unchanged at 3.75-4.00% on Wednesday, following September's 25bp increase," reinforcing expectations of steady rates.

Expectations for further tightening remain limited over the longer horizon, with the analysts noting that "the Fed funds futures are pricing in no change this week, a total hike of 22bp by end-2026, and a total hike of 69bp by end-2027,". In this context, Commerzbank says "the markets will look for the Fed's guidance on the likelihood of a hike in December," while investors weigh whether inflation that remains high, alongside forthcoming US data, could prompt the FOMC to act again later in the year.

Thursday’s scheduled releases will also draw investor attention this week: the preliminary Q3 Gross Domestic Product (GDP) estimate and September’s Personal Consumption Expenditure (PCE) Price Index.

Silver Technical Analysis: Can Prices Ease the Bearish Pressure?

A near-term bearish outlook persists on the daily chart, where XAG/USD stands at $53.42, substantially below the 20-day exponential moving average (EMA) of $57.82. This sizeable distance from a key dynamic resistance level points to continued downside pressure. Meanwhile, the Relative Strength Index (RSI), at 30.22, is close to oversold territory. Sellers therefore appear to retain control, even as the most recent decline begins to look overstretched.

Any recovery would first face resistance at $54.77, the July 17 low, followed by the 20-day EMA at $57.82. Regaining that moving average would be necessary to temper the prevailing bearish sentiment and create scope for a more substantial rebound. A further slide, however, could take the asset towards $50.00.

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

Silver: Frequently Asked Questions

What draws investors to Silver?

Portfolio diversification, intrinsic value and the possibility of protection against high inflation can attract traders to Silver, even though it is less popular than Gold. This actively traded precious metal has long served both as a store of value and as a means of exchange. Investors seeking exposure can purchase physical Silver as coins or bars, or use instruments such as Exchange Traded Funds that follow its price in international markets.

What drives changes in Silver prices?

Several forces shape Silver prices, including interest rates, currency movements and demand for safe-haven assets. Geopolitical turmoil or concerns about a severe recession can lift the metal’s price because of its safe-haven appeal, though this effect is weaker than for Gold. Silver pays no yield, so lower interest rates generally support it. Since the metal is quoted in US dollars (XAG/USD), movements in the US Dollar (USD) also matter: Dollar strength typically restrains Silver prices, while a weaker currency is likely to lift them. Investment demand, recycling rates and mining supply can influence prices too; Silver is considerably more abundant than Gold.

Why does industrial demand matter for Silver prices?

Stronger industrial demand can push Silver prices higher, whereas a slowdown in demand generally weighs on them. The metal is extensively used in industries such as electronics and solar energy because its electrical conductivity ranks among the highest of all metals, exceeding that of Copper and Gold. Developments in the US, Chinese and Indian economies can also trigger price fluctuations. Large industrial sectors in the US, and especially China, consume Silver in a range of processes, while demand from Indian consumers for Silver jewellery is another important influence on prices.

How closely does Silver track Gold prices?

Given their similar appeal as safe-haven assets, Silver generally tracks Gold, typically advancing when Gold prices rise. Investors may use the Gold/Silver ratio to assess the two metals’ relative valuations. This ratio expresses how many ounces of Silver are required to match 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. Conversely, a low reading could indicate that Gold is undervalued compared with Silver.