Silver Price Forecast: XAG/USD revisits monthly high near $61 as oil price plunges further
- Silver price jumps to near $60.95 as oil prices fall sharply.
- Investors are uncertain regarding the freedom of navigation through the Hormuz Strait.
- US ADP Employment Change and NFP data for July are awaited.
Silver price (XAG/USD) trades 1.8% higher at around $60.95 during the Asian trading session on Wednesday. The white metal attracts significant bids as oil prices face a sharp sell-off amid hopes of a resolution in conflicts between the United States (US) and Iran regarding the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply and Tehran’s nuclear ambitions.
As of writing, the WTI Oil price trades 0.8% lower at around $73.80.
Global inflation expectations get anchored by lower oil prices, which diminish fears of interest rate hikes by central banks. Such a scenario bodes well for non-yielding assets, like Silver.
Hopes for US-Iran conflict resolution are backed by comments from US officials that a deal would be reached soon. On Tuesday, US Treasury Secretary Scott Bessent said in a CNBC interview that a deal with Iran to reopen the critical chokepoint could be reached “as soon as Tuesday or Wednesday”.
However, financial markets are uncertain regarding whether ongoing talks would restore freedom of navigation through the critical chokepoint. So far, Iran has just confirmed that it is in talks with Oman over the charge of the Hormuz Strait.
Meanwhile, investors await the US Nonfarm Payrolls (NFP) data for July to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook. In Wednesday’s session, investors will focus on the ADP Employment Change data for July, which will be published at 12:15 GMT.
Deutsche Bank looks for modest pickup in US July payrolls
Economists at Deutsche Bank expect a slightly firmer US labour market print on Friday, projecting that the July payrolls report will show employment growth of “+65k, modestly above June’s +57k reading,” with “private payrolls … also expected to rise by +65k after +49k previously.” Set alongside their projections for a 4.2% unemployment rate, with risks skewed toward 4.3% on higher participation, and average hourly earnings rising 0.3% month-on-month, the bank’s forecasts point to a still‑moderate pace of job creation consistent with nominal income growth running at around 4.4% year‑on‑year.
Silver technical analysis
XAG/USD trades higher at around $60.95, holding above the 20-period exponential moving average (EMA) at $59.05, which now underpins a constructive near-term bias. The EMA offers underlying trend support as price advances away from the recent lows, while the Relative Strength Index (RSI) at 53.23 sits in neutral-to-positive territory, hinting that bullish momentum is building but not yet overstretched.
On the downside, immediate support is located at the 20-day EMA at $59.05, where a pullback could find buyers to preserve the short-term uptrend. Below that, the July 17 low at $54.77 is the key support level. Looking up, the Silver price could extend the advance towards the July 6 high at $63.28 if it manages to stabilize above $61.00
(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.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
