Silver Price Forecast: XAG/USD rebounds strongly as oil prices come under heavy pressure

• Silver price recovers sharply towards $50.35 as oil extends its correction.
• Key US economic releases and the US mid-term elections become the focus for investors.
• Expectations put the likelihood of Democrats winning control of the Senate at 72.0%.

A 2.45% rise brings Silver (XAG/USD) close to $50.35 during Monday’s European trading. With oil prices continuing to retreat, the white metal has recovered strongly from Friday’s $48.86 low, its weakest level in almost a year.

Having reached a five-month high of $104.03 on Friday, WTI Oil has since slipped to just below $100 at the time of writing.

Concerns about an acceleration in global inflationary pressures ease when oil becomes cheaper. This could temper expectations that central banks will maintain monetary tightening for longer, providing a favourable backdrop for non-yielding assets such as Silver.

Signals that the United States (US) would favour a diplomatic solution with Iran over renewed military strikes have weighed on oil prices.

Attention is also turning to the US mid-term elections and major US economic releases, particularly Nonfarm Payrolls (NFP). These could influence expectations for the Federal Reserve’s (Fed) monetary policy path.

US midterms poised to alter fiscal outlook as markets assess close contest for Congress

Turning to the week ahead, Deutsche Bank strategists observe that “tomorrow’s midterms will determine control of Congress for the final two years of President Trump’s term.” In their assessment, current polling “suggests Democrats are favoured to gain the three seats needed for a House majority, while the Senate remains a much closer contest,” and the result in either chamber could take “several days to become clear if the margins are tight.”

On market-implied odds, Deutsche Bank notes that “Polymarket currently put the probability of the Democrats taking the Senate at 72.0%. Well renowned pollster Nate Silver currently suggests a 75% probability.”

Looking at the immediate fiscal implications, economists at Deutsche Bank warn that “the lame-duck session after the election could prove at least as consequential as the composition of the new Congress,” given “government funding expiring on December 11 and Republicans likely to seek a reconciliation bill that could include additional defence spending and potentially address the debt limit.”

Silver Remains Under Near-Term Technical Pressure

At $50.35 on the daily chart, XAG/USD remains well below its 9-day Exponential Moving Average (EMA) of $53.02, maintaining a bearish near-term bias. This dynamic resistance continues to weigh on the metal. Meanwhile, the Relative Strength Index (RSI) stands at 28.90 in oversold territory, suggesting that downward momentum is stretched without yet showing a decisive reversal.

The first upside hurdle is the 9-day EMA near $53.02; only a sustained move above it would alleviate the prevailing bearish tone. Although the dataset offers no nearby structural support level, an oversold RSI of around 28.90 indicates that sellers may become less convinced on further declines. That could moderate the fall rather than define a clear support area.

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