Silver Price Forecast: XAG/USD Stages Strong Recovery as Oil Prices Come Under Pressure

• Silver stages a sharp recovery towards $50.35 as oil extends its correction.
• Market attention turns to the US mid-term elections and major US economic releases.
• Expectations put the chances of Democrats securing the Senate at 72.0%.

A strong recovery has lifted Silver (XAG/USD) by 2.45% to around $50.35 during Monday’s European session, supported by a further correction in oil prices. The rebound follows Friday’s fall to $48.86, a fresh low in almost a year.

At the time of writing, WTI Oil has retreated to just below $100, having reached a five-month high of $104.03 on Friday.

With oil becoming cheaper, concerns about a pick-up in global inflationary pressures are easing. This could temper expectations that central banks will maintain monetary tightening for an extended period, creating a favourable backdrop for non-yielding assets such as Silver.

Pressure on oil follows indications from the United States (US) that it would favour a diplomatic settlement with Iran over renewed military strikes.

Investors are also looking ahead to the US mid-term elections and important US economic releases, particularly Nonfarm Payrolls (NFP). These events could influence expectations surrounding the Federal Reserve’s (Fed) monetary policy outlook.

How could US midterms reshape the fiscal outlook amid a close Congress race?

Examining the week’s events in greater detail, 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.”

Turning to the near-term fiscal outlook, 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,” citing “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 Technical Analysis: Can Oversold Conditions Ease the Bearish Bias?

Trading at $50.35 on the daily chart, XAG/USD retains a bearish near-term bias, with the price well below the 9-day Exponential Moving Average (EMA) of $53.02. This dynamic overhead 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; a sustained move above it would be required to soften the prevailing bearish bias. On the downside, the dataset offers no nearby structural price floor. However, with the RSI close to 28.90 and indicating oversold conditions, sellers may become less committed on further declines. That could moderate the fall rather than define a clear support zone.

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