Silver Price Forecast: XAG/USD retreats towards $57.40 while oil prices hold broadly firm

• Elevated oil prices weigh on Silver as it slides towards $57.40.
• Oil prices remain supported by persistent tensions in the Middle East.
• Interest rates are expected to remain unchanged when the Fed meets later this month.

A 1.1% decline leaves Silver (XAG/USD) trading near $57.40 in Wednesday’s European session. Higher oil prices have fuelled concerns over rising global inflation, putting the white metal under selling pressure.

At the time of writing, WTI Oil is trading slightly higher at around $98.25, not far from the five-week high of $101.05 reached on Tuesday.

Energy supply risks continue to mount as Iran maintains its attacks on oil tankers and threatens Saudi Arabia’s oil infrastructure. These risks are sustaining a premium in oil prices.

Growing concerns over Middle East supplies have pushed oil prices higher, according to analysts at Danske Bank, who say traders are becoming more cautious about "Red Sea shipping risks and threats to oil infrastructure in Saudi Arabia." Noting that oil prices "have gained more than 10% this month", the bank attributes the move to "intensifying hostilities involving Saudi Arabia and Iran-backed Houthi forces, as well as Russia and Ukraine's attacks on energy infrastructure raised supply risks further," which has strengthened the market’s recent upward momentum.

If inflationary pressures intensify, expectations of interest rate rises by the Federal Reserve (Fed) could strengthen further. Such a scenario would lift yields on interest-bearing assets while reducing the appeal of non-yielding assets such as Silver.

For now, however, the CME FedWatch tool indicates that the Fed is expected to leave interest rates unchanged at its policy meeting later this month.

Silver Technical Analysis Points to Continued Downside Pressure

Trading at $57.25 on the daily chart, XAG/USD remains beneath the 20-day exponential moving average (EMA) of $59.66, maintaining a bearish near-term outlook. This dynamic overhead resistance continues to limit the metal’s advance, suggesting that rallies may struggle for as long as the price stays below the EMA. At 38.77, the Relative Strength Index (RSI) is still under the neutral 50 threshold, signalling persistent bearish momentum rather than an extreme oversold reading.

The 20-day EMA at $59.66 provides the first resistance on the upside. A sustained move above it would be required to alleviate immediate downward pressure. The key support on the downside is the 17 July low of $54.77.

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