Silver Price Forecast: XAG/USD rebounds from year-to-date lows as Fed rate decision nears

Easing Oil prices support a Silver recovery ahead of the Fed’s interest rate decision.
Below the 100-day and 200-day SMAs, a sequence of lower highs and lower lows sustains the bearish outlook.
Near 34, the daily RSI points to sellers’ advantage alongside a negative MACD.

$52.67 marked a fresh year-to-date low for Silver (XAG/USD) during Tuesday’s Asian session. The metal subsequently recovered as softer Oil prices provided some relief amid ongoing diplomatic efforts to ease Middle East tensions. XAG/USD stands at around $54.50 at the time of writing, a gain of 0.96% on the day.

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A stronger US Dollar (USD), however, is capping the advance ahead of Wednesday’s Federal Reserve (Fed) interest rate decision. Near a two-week high, the US Dollar Index (DXY) stands at around 102.23. The index measures the Greenback against a basket of six major currencies.

At this week’s October FOMC meeting, BNY Markets strategists anticipate no policy change from the Fed, broadly matching market pricing. They write: “We don’t foresee a rate hike at the October FOMC tomorrow and prefer to place our expectations for further tightening on the December meeting,” adding that, “based on Fed commentary and a steady, if sticky, inflation outlook, we don’t think the weight of the Committee will fall on the hawkish side.”

Given widespread expectations for a pause, attention will turn to the policy statement and comments from Fed Chair Kevin Warsh for indications of when the next rate hike may come. Higher rates increase the opportunity cost of holding non-yielding Silver and therefore tend to pressure the metal. A hawkish tone could put Silver under pressure; a more cautious message could allow the recovery to continue.

$55 resistance: XAG/USD technical outlook

Following a brief peak above $70 in late August, XAG/USD has maintained a pattern of lower highs and lower lows on the daily chart. Trading below both the 100-day and 200-day Simple Moving Averages (SMAs) keeps the near-term outlook bearish.

Around 34, the Relative Strength Index (RSI) suggests persistent but not extreme oversold conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) remains negative. Its line is below zero and momentum is muted, supporting the risk of a further corrective decline.

The nearby horizontal level at $55 provides initial resistance. Beyond it, $60 and the 100-day SMA at $62 create a concentrated barrier to any bullish recovery attempt. Further resistance lies at the $65 horizontal level and the 200-day SMA at $71. Reclaiming these zones would be necessary to move the broader outlook away from its current bearish bias.

A downside breach of Monday’s $52.67 low would bring psychological support at $50.00 into view. A clear break beneath that threshold could pave the way for a more substantial decline.

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

Silver: key questions answered

What attracts investors to Silver?

Widely traded by investors, Silver is a precious metal with a long history as both a store of value and a means of exchange. Gold remains more popular, but traders may choose Silver for portfolio diversification, its intrinsic value or its potential to hedge against periods of high inflation. Investment options include physical coins and bars, as well as instruments such as Exchange Traded Funds that follow Silver’s price in international markets.

What drives changes in Silver prices?

A broad set of influences can drive Silver prices. Its safe-haven role means geopolitical turmoil or concerns over a severe recession can lift the metal, though the effect is generally smaller than for Gold. Lower interest rates also tend to support Silver because it pays no yield. With Silver quoted in dollars (XAG/USD), movements in the US Dollar (USD) are another key influence: Dollar strength tends to restrain prices, while weakness is likely to lift them. Investment demand, recycling rates and mining supply also matter. Silver is much more abundant than Gold.

What role does industrial demand play in Silver pricing?

Among metals, Silver has one of the highest levels of electrical conductivity, exceeding both Copper and Gold. This makes it widely used in industrial applications, especially electronics and solar energy. Stronger demand can push prices higher, whereas weaker demand tends to pull them lower. Economic developments in the US, China and India can also drive fluctuations. Large industrial sectors in the US and, particularly, China use Silver in a range of processes. In India, consumer demand for Silver jewellery is also an important influence on prices.

How closely does Silver follow Gold prices?

Gold’s price direction tends to guide Silver. A rise in Gold is usually accompanied by gains in Silver, reflecting their similar safe-haven status. Relative valuations can be assessed using the Gold/Silver ratio, which expresses how many ounces of Silver equal the value of one ounce of Gold. A high ratio may, in some investors’ view, signal undervalued Silver or overvalued Gold. Conversely, a low ratio may indicate that Gold is undervalued compared with Silver.