Silver Price Forecast: XAG/USD struggles around $33.00 as Fed officials guide restrictive policy stance
- Silver price faces pressure above $33 as Fed policymakers see interest rates remaining in the current range of 4.25%-4.50%.
- Fed officials struggle to gauge the impact of Trump’s economic agenda on the economy.
- The broader outlook of the Silver price remains firm amid Trump’s tariff agenda.
Silver price (XAG/USD) faces selling pressure above the key level of $33.00 in North American trading hours on Friday. The white metal drops as the US Dollar (USD) gains, with Federal Reserve (Fed) officials continuing to guide a restrictive monetary policy stance. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, advances to near 106.75.
On Thursday, Fed Governor Adriana Kugler said that the central bank should keep borrowing rates “in place” for “some time,” noting the net effect of new economic policies by United States (US) President Donald Trump is “highly uncertain” and will depend on the “specifics.”
The scenario of the Fed maintaining a restrictive interest rate stance bodes poorly for precious metals such as Silver price.
Meanwhile, fears of President Trump’s tariff agenda would keep the Silver price on the frontfoot. On Thursday, Trump announced that he could impose tariffs on lumber and forest products, cars, pharmaceuticals, and semiconductors over the next month or sooner. Market participants expect Trump’s tariff agenda will lead to a global economic slowdown.
Investors are also focusing on development in Russia-US talks to end the war in Ukraine. This week, Donald Trump agreed to hold more talks with Russian leader Vladimir Putin for negotiations to have a truce with Ukraine. A positive outcome from peace talks would weaken the safe-haven appeal of the Silver price.
Silver technical analysis
Silver price aims to revisit an over three-month high of $33.40, which it posted on February 14. The outlook of the white metal is bullish as the 50-day Exponential Moving Average (EMA) has been sloping higher, which trades around $31.33.
The 14-day Relative Strength Index (RSI) oscillates in the 60.00-80.00 range, suggesting that the momentum is strongly bullish.
Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the October 22 high of $34.87 will be the key barrier.
Silver 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.