Silver Price Forecast: XAG/USD faces pressure near $76.60 as US yields rebound
- Silver price falls back from $76.60 as US Treasury yields bounce back.
- US Treasury Yields corrected after President Donald Trump expressed confidence about a deal with Iran.
- The Fed is unlikely to cut interest rates this year.
Silver price (XAG/USD) is down 0.7% to near $75.20 during the early European trading session on Thursday. The white metal drops after failing to extend the recovery above $76.60 earlier in the day.
The precious metal faces pressure as the United States (US) Treasury yields rebound after a steep correction on Wednesday. 10-year US Treasury yields are 0.3% higher to near 4.6%, but have corrected from their multi-year high of 4.69% posted on Tuesday.
US Treasury yields came under pressure, following comments from US President Donald Trump that Washington is in the “final stages” of finalizing a deal with Iran. Bond yields were rallying in the past two weeks as traders raised bets supporting the Federal Reserve’s (Fed) interest rate hikes this year due to elevated oil prices amid the Strait of Hormuz closure.
The CME FedWatch tool shows that the odds of the Fed delivering at least one interest rate hike this year are 51%, a sharp turnaround from two interest rate cuts anticipated before the onset of the Middle East war.
Theoretically, higher yields on interest-bearing assets diminish the appeal of non-yielding assets, such as Silver.
The outlook of US bond yields is expected to remain bullish unless the US inflation starts showing signs of cooling down.
Silver technical analysis
XAG/USD trades lower at around $75.22 at the press time. The white metal holds a bearish near-term bias as price sits below the 20-day Exponential Moving Average (EMA) at $77.84 and beneath the upward-sloping border of the Ascending Triangle formation, now acting as resistance around $78.31. The loss of that trend support hints at a corrective phase within the broader advance, while the Relative Strength Index (14) near 46 stays in neutral-to-soft territory, suggesting downside pressure persists but without oversold extremes.
On the topside, initial resistance is located at the 20-day EMA around $77.84, which caps immediate recovery attempts, followed by the May 15 high at $83.88. Looking down, the Silver price ould slide towards $70 if it fails to return above the Triangle's upward-sloping border. A downside move below $70.00 would expose the Silver price to the March 26 low at $66.71.
(The technical analysis of this story was written with the help of an AI tool.)
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.