Silver Price Forecast: Can XAG/USD Sustain Its Rebound From Year-to-Date Lows Ahead of the Fed Rate Decision?

Silver recovers as softer Oil prices provide relief, with traders awaiting 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.
Sellers appear to remain in control, with the daily RSI around 34 and the MACD in negative territory.

Silver (XAG/USD) is recovering on Tuesday, supported by relief from softer Oil prices as diplomatic efforts to ease Middle East tensions continue. Earlier in the Asian session, the metal touched a new year-to-date low of $52.67. At the time of writing, XAG/USD is trading near $54.50, a gain of 0.96% for the day.

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

Gains in the metal are nevertheless being capped by a stronger US Dollar (USD) as markets await Wednesday’s interest rate decision from the Federal Reserve (Fed). Near a two-week high, the US Dollar Index (DXY) is trading at around 102.23. The index measures the Greenback against a basket of six major currencies.

An unchanged policy stance at this week’s October FOMC meeting is the expectation of strategists at BNY Markets, broadly matching current 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,” and add 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.”

Attention will turn to the Fed’s policy statement and remarks by Chair Kevin Warsh for indications of when the next rate hike could come, given widespread expectations of a pause. Since Silver offers no yield, higher interest rates generally put pressure on it by raising the opportunity cost of holding the metal. A hawkish signal could therefore hurt Silver, whereas a more cautious message could allow the recovery to continue.

Can Silver overcome its bearish technical outlook?

A bearish near-term outlook persists on the daily XAG/USD chart, with prices holding beneath the 100-day and 200-day Simple Moving Averages (SMAs). Since briefly rising above $70 in late August, Silver has continued to trace a series of lower highs and lower lows.

Further corrective declines remain a risk, as the Moving Average Convergence Divergence (MACD) indicator is negative, its line sits below zero and momentum remains weak. Meanwhile, a Relative Strength Index (RSI) reading near 34 points to persistent, though not extreme, oversold conditions.

Any recovery attempt by bulls would first encounter horizontal resistance nearby at $55. Beyond that, $60 and the 100-day SMA at $62 create a substantial barrier to further gains. The next resistance areas lie at the $65 horizontal level and the 200-day SMA at $71; reclaiming these would be necessary to move the broader outlook away from its current bearish stance.

If Monday’s $52.67 low gives way, attention would shift to psychological support at $50.00. A clear breach of that level could pave the way for a more pronounced fall.

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

Common questions about Silver

What attracts investors to Silver?

Investors actively trade Silver, a precious metal with a long history as both a store of value and a means of exchange. While it attracts less attention than Gold, traders may choose Silver for its intrinsic value, to diversify their portfolios or as a possible hedge against high inflation. Exposure can come through physical purchases of coins or bars, or through instruments such as Exchange Traded Funds that track Silver’s price in international markets.

What drives changes in Silver prices?

A broad set of influences can drive Silver prices. Its safe-haven appeal can lift prices when geopolitical tensions rise or fears of a severe recession emerge, though this effect is generally weaker than for Gold. Lower interest rates usually support Silver because it pays no yield. The US Dollar (USD) is another important driver, as Silver is priced in dollars (XAG/USD): a stronger Dollar tends to restrain prices, while a weaker one is likely to push them higher. Investment demand, recycling rates and mine supply also influence prices, with Silver far more abundant than Gold.

How does industrial usage influence Silver prices?

Industrial demand is an important influence on Silver, with stronger demand capable of pushing prices higher and weaker demand generally pulling them lower. The metal is extensively used in areas such as electronics and solar energy because its electrical conductivity ranks among the highest of all metals, exceeding that of Copper and Gold. Economic developments in the US, China and India can also cause price fluctuations. Large industrial sectors in the US and especially China consume Silver across a range of processes, while demand from Indian consumers for Silver jewellery is also a key factor in determining prices.

How closely does Silver track Gold prices?

Moves in Gold often set the direction for Silver. Given their similar safe-haven status, a rise in Gold prices is typically accompanied by an increase in Silver. Investors may use the Gold/Silver ratio to assess the metals’ relative valuations. This ratio 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, by contrast, could indicate that Gold is undervalued compared with Silver.