Silver Price Forecast: XAG/USD extends decline to nearly 60% below January peak

Broad-based selling in precious metals leaves Silver on course for its sharpest monthly loss since June.
Sellers retain a firm grip as XAG/USD holds substantially below its daily moving averages.
Despite an oversold RSI reading, a negative MACD and elevated ADX point to a robust downtrend.

Selling pressure on Silver (XAG/USD) deepens on Friday, with a fall of more than 5% taking prices below $50 to their weakest level since November 2025. October's losses are now set to reach around 18%, marking the white metal's sharpest monthly decline since the 22% drop in June.

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Weakness across precious metals forms the backdrop to the decline. Gold (XAU/USD) has also slipped beneath $4,000, returning to levels last recorded in October 2025. Intense selling has weighed on precious metals since war broke out in the Middle East in late February. The conflict sent Oil prices sharply higher, putting pressure on major central banks, especially the Federal Reserve (Fed), to increase interest rates to curb inflation.

For Silver and other assets that generate no interest income, higher borrowing costs diminish their appeal. After the Fed held rates steady at 3.75%-4.00% on Wednesday, traders expect the central bank to deliver another rate increase in December.

From its January record high near $121, Silver has now lost nearly 60%. Forced liquidation may be contributing to the latest downturn, as a sell-off in technology shares driven by concerns over heavy AI spending rattles financial markets. To raise cash, investors nursing losses in other assets may be offloading precious metals. Broad strength in the US Dollar (USD) is adding further pressure.

Can Silver Ease the Bearish Pressure?

A firmly bearish picture persists on the daily chart, where XAG/USD continues to retreat far beneath the 50-day, 100-day and 200-day Simple Moving Averages (SMAs). Now broken at $60, the prevailing descending trend line remains a reference point above the market. Momentum indicators also highlight persistent selling: at 23, the Relative Strength Index (14) is in oversold territory, while the Moving Average Convergence Divergence (MACD) indicator remains negative and below zero. Together with an elevated Average Directional Index (ADX) near 39, these readings suggest that the downtrend remains strong and intact.

Any recovery would first encounter horizontal resistance at $50 and then $55, ahead of the broken trendline zone around $60. That zone sits close to the 100-day SMA and the 50-day SMA at $61, creating a concentrated cluster of resistance. Further above, the 200-day SMA at $70.39 represents a more distant structural ceiling.

The next horizontal support is positioned near $45; stronger selling pressure could open the way for additional losses. Oversold conditions notwithstanding, a sustained rebound above the $50-$55 range would be needed before immediate bearish pressure starts to subside.

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

Common Questions About Silver

What Makes Silver an Investment Choice?

Investors actively trade Silver, a precious metal that has long served both as a store of value and as a means of exchange. Gold attracts more interest, but Silver may appeal to traders seeking portfolio diversification, intrinsic value or a potential hedge against periods of high inflation. Exposure can be obtained by purchasing physical Silver as coins or bars, or by trading instruments such as Exchange Traded Funds that track its price in international markets.

What Drives Changes in Silver Prices?

Several forces can influence Silver prices. Its safe-haven appeal can lift prices during geopolitical turmoil or when fears of a severe recession rise, though the effect is generally less pronounced than for Gold. Lower interest rates tend to support Silver because it pays no yield. With prices quoted in dollars (XAG/USD), movements in the US Dollar (USD) also matter: Dollar strength typically restrains Silver, while a softer Dollar is likely to lift it. Prices are also influenced by investment demand, recycling rates and mine supply, with Silver far more abundant than Gold.

Why Does Industrial Demand Matter for Silver Prices?

Industrial activity is an important source of demand for Silver, notably in electronics and solar energy. Its electrical conductivity ranks among the highest of all metals, exceeding that of Copper and Gold. Rising demand can push prices higher, whereas weaker demand tends to depress them. Developments in the US, Chinese and Indian economies can also drive price fluctuations. The large industrial sectors of the US and, in particular, China consume Silver in a variety of processes. In India, consumer demand for Silver jewellery is another key influence on prices.

How Closely Does Silver Track Gold Prices?

Gold's price direction often sets the tone for Silver. A rise in Gold generally brings a corresponding increase in Silver, reflecting their similar role as safe-haven assets. To assess the metals' relative valuations, investors may use the Gold/Silver ratio: the number of ounces of Silver equal in value to one ounce of Gold. Some investors may interpret a high ratio as a sign that Silver is undervalued or Gold is overvalued. A low ratio, by contrast, could indicate that Gold is undervalued compared with Silver.