Silver Price Forecast: Bears Threaten Core Trendline as XAG/USD Flushes into Deeply Oversold Territory

Quick overview

The uncoiling of paper premiums on spec has been accelerating at a faster pace, which is forcing spot prices to test the far edges of longer-term fundamentals. On Tuesday, June 23, 2026, silver spot prices were hit with a violent short-term liquidation trade in the early afternoon session, down -0.76%, to spot $62.84/troy oz. The selling of paper leveraged positions, by algos and macro hedge fund managers, in a concentrated way today, is likely to overcome most near-term physical demand, creating a test of historical support levels.

46.3Moz Persistent Physical Shortfall

Paper prices continue to see a very large divergence in the spot physical market in their respective availability. As reported by the Silver Institute, the physical market has been in a deficit cycle for six years, in 2026, this deficit in available supply will expand by 46.3Moz. With 72% of the metal’s production coming as byproduct output from primary lead, zinc, or copper mining operations, miners would struggle to add any volume to the supply curve in a near-term context. The continued industrial demand of silver in the premium computing markets in AI, high frequency 5G, and automotive, will further exacerbate the physical availability. That being said, paper desks will be tracking production reports which show that spot prices this year have caused a 19% drop in solar photovoltaic usage for silver. This production will continue to decline to a point where the paper prices will see a drop in volume from the industrial markets, and a decline in paper prices.

Warsh ‘Unambiguous and Unanimous’

The hawkish tone from the recently appointed Federal Reserve Chair Kevin Warsh at the June 16-17 FOMC meeting, the first official meeting as Chair, has been very strong in his commitment to bring down inflation. Warsh’s tone on the meeting was a rejection of previous policy forward guidance from central banks, and a pivot towards a data-driven and restrictive stance, with a clear ‘unambiguous and unanimous’ message in bringing back to target inflation from 4.1% for core CPI and 3.8% for headline CPI back down to 2.0%. With the benchmark policy rates sitting in the 3.50% to 3.75% range, and the Summary of Economic Projections (SEP) updated to show the majority of committee members are projecting at least one additional interest rate hike by year end, the Warsh Fed have removed the potential for more easing policy in the near-term, with real US bond yields at a cyclical high, a strong bullish trend in USD and silver prices near the replacement cost.

Swiss Agreement Relieved Maritime Shipping Issues

As reported in today’s commodity news and geopolitical developments, there has been a reduction in systemic risks premiums across commodities as US-Iran interim agreement, “Islamabad Memorandum of Understanding”, was agreed upon on June 19 in Switzerland, in which commercial ship tanker trade through the Strait of Hormuz has recovered to about 85% to capacity, driving down prices for spot WTI and Brent crude oil futures contracts to below $75/bbl as we speak, with a decrease in the safe haven flow into precious metals. This will have a positive impact on energy intensive global manufacturing hubs in Asia in the near-term future.

Silver Technical Analysis: XAGUSD Delivers High-Volume Breakdown Below Oversold Channel

Now shifting gears from the central bank dot plot to the 2H technical chart, we see silver has completed an extremely aggressive breakdown cycle with momentum indicators deep in extended territory.

1. Trendline Breakdown: XAGUSD ($62.84) has executed an aggressive high-volume breakdown below the primary $63.31 horizontal support zone and also the longer-term black ascending trendline. Big consecutive bearish candles indicate heavy near-term selling, and as a result, price is heading towards the bottom of the main descending channel.
2. Extreme Momentum Stretched: The 14-period RSI is deep into compressed, oversold territory, currently at a raw 28.73 level. Despite the broader trend still being negative below the downward sloping 2H EMA50 ($66.34) and 2H EMA200 ($69.30), stretched readings strongly hint that selling is likely reaching a near-term peak.
3. Tactical Execution Strategy: High-probability setups are outlined in 2 scenarios:

• Bullish Mean-Reversion Strategy: For a setup in line with the current oversold levels, mean-reversion traders can watch for a bullish signal with confirmation by a 2H candle reversal or stabilization within the $61.50 major horizontal support. Use a tight stop-loss below the invalidation zone at $60.57. Short-covering rallies will first aim for the broken trendline flip at $64.85, followed by a move toward the .382 Fib level at $65.82.
• Bearish Trend-Continuation Strategy: Alternatively, more bearish traders should ignore short-term dips to enter short positions on any quick, low-volume intraday relief rallies. Wait for a move back into the $64.85 to $65.82 supply area to take shorts, setting the stop-loss above the 2H EMA50 ($66.34). The first major stop would take profit on a continuation drive toward a deeper $58.00 logical support zone.

Silver is still going through an aggressive macro repositioning process. Although Kevin Warsh and the hawkish Federal Reserve will maintain a tight near-term capital stance in derivative markets around the world, the 46.3 million ounce physical supply deficit is very likely to keep the silver market very responsive to huge squeezes from long positions as June ends.

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.

His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.

His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.