Silver Price Forecast: XAG/USD trades below $67.00 amid mixed setup as US NFP looms
- Silver struggles to capitalize on its gains registered over the past two days.
- A bearish USD could support the commodity as traders await the US NFP.
- The mixed technical setup warrants caution for aggressive bullish traders.
Silver (XAG/USD) edges lower during the Asian session on Friday, snapping a two-day winning streak to the weekly high set the previous day. The white metal, however, lacks bearish conviction and currently trades below the $67.00 mark, down 0.30% for the day, as traders await the release of the closely watched US Nonfarm Payrolls (NFP) report.
Heading into the key data risk, receding bets for an interest rate hike by the US Federal Reserve (Fed) in September and sliding US bond yields keep the US Dollar (USD) near its lowest level in over a week. This, in turn, is seen as a key factor acting as a tailwind for USD-denominated commodities, including the XAG/USD. That said, the technical setup warrants some caution for bullish traders and positioning for an extension of this week's goodish rebound from the $63.30 area.
The XAG/USD trades below the 200-day Simple Moving Average (SMA) at $72.84 and the mid-range Fibonacci retracement level of the May-July decline. Moreover, mixed technical momentum indicators suggest that rallies remain capped for now. In fact, the Relative Strength Index hovers in the mid-50s and the Moving Average Convergence Divergence (MACD) slips into negative territory, hinting at waning upside pressure and validating the near-term cautious outlook.
On the topside, immediate resistance emerges at the 38.2% retracement at $67.83, followed by a more significant barrier at the 50.0% retracement at $71.89 and the 200-day SMA at $72.84. A sustained strength above this cluster would be needed to ease the broader downside bias and expose the 61.8% level near $75.95. On the downside, initial support is seen at the 23.6% Fibo. level at $62.81, with a deeper floor at the prior cycle low around the 0.0% retracement at $54.69, where buyers would be expected to re-emerge if selling accelerates.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.