Silver Price Forecast: XAG/USD seems vulnerable near $60 amid soaring US Treasury Yields
- Silver price trades cautiously at around $60 as US Treasury Yields continue to rally.
- 10-year US Treasury Yields post a fresh two-decade high near 5.3%.
- Traders have trimmed hawkish Fed bets for the October meeting.
Silver price (XAG/USD) trades with caution near its four-week low at around $60.00 during the European trading session on Thursday. The white metal is broadly under pressure as United States (US) Treasury Yields continue to extend the rally even as traders have trimmed hawkish Federal Reserve (Fed) expectations for the October meeting and Personal Consumption Expenditure (PCE) Price Index data for August arrived lower-than-projected.
10-year US Treasury Yields have hit a fresh two-decade high near 5.3%. Higher yields on interest-bearing assets, diminish the appeal of non-yielding assets, such as Silver.
The CME FedWatch tool shows that the odds of the Fed leaving interest rates unchanged at the policy meeting this month have increased to 62.4% from 29% seen a week ago. Traders dialled bacl hawkish Fed bets after New York Fed Bank President John Williams said that there is no urgency for interest rate cuts.
Contrary to market expectations, analysts at TD Securities said, “We still expect the Fed to lift rates in October, but can't discard a more gradual approach”, arguing that “the underlying trend is the key story,” with “robust growth with rising inflation risks” expected to “continue to dominate the Fed's outlook.” TD Securities added that the latest US PCE and GDP revisions were “a mixed bag,” combining “hawkish backward adjustments to growth and dovish adjustments to inflation.”
Going forward, the next major movement in the Silver price is expected to come from the US Nonfarm Payrolls (NFP) data for September, which will be published on Friday.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $60.38, maintaining a bearish near-term tone as price holds well below the 20-period Exponential Moving Average (EMA) at $63.66. The downside break away from this key dynamic barrier suggests sellers remain in control, while the Relative Strength Index (14) at 38.50 hovers just above oversold territory, hinting at persistent but not yet exhausted bearish momentum.
On the topside, initial resistance is the August 19 low at $62.19 before the 20-period EMA at $63.66 coming into picture as a dynamic barrier. On the downside, the Silver price could slide towards the August 4 low at $58 if it fails to hold $60.00.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.