- Silver holds firm as a softer US Dollar and lower Treasury yields offer some relief.
- XAG/USD remains below its key daily SMAs, keeping the technical outlook bearish.
- RSI below 50 and negative MACD suggest rallies remain vulnerable to selling.
Silver (XAG/USD) holds firm on Tuesday, supported by a pullback in the US Dollar (USD) and US Treasury yields. At the time of writing, the metal trades around $61.50, up 0.75% on the day. Despite the intraday bounce, Silver remains confined to a narrow range, with fundamental headwinds and technical resistance limiting the upside.
US Treasury yields remain elevated near multi-year highs despite Tuesday’s retreat, increasing the opportunity cost of holding non-yielding assets such as Silver. Persistent inflation risks keep the Federal Reserve (Fed) leaning toward further tightening as it seeks to bring inflation back toward its 2% target, although recent softer-than-expected US employment and inflation data have tempered expectations of a rate hike at the October 27-28 meeting.
Traders still anticipate one additional rate hike this year, most likely in December. Attention now turns to the Federal Open Market Committee (FOMC) meeting minutes, due on Wednesday, for clues on the Fed’s next move.
Technical analysis
On the daily chart, XAG/USD remains confined between $60 and $62, trading below the 50-, 100- and 200-day Simple Moving Averages (SMAs) and the 61.8% Fibonacci retracement at $62.13. The Relative Strength Index (RSI) at 43 stays in neutral-to-soft territory and the Moving Average Convergence Divergence (MACD) indicator is negative, together hinting that rallies are likely to face selling interest rather than signal a sustained bullish reversal.
On the topside, initial resistance sits at the range ceiling near $62, closely aligned with the 61.8% retracement at $62.13. A break above this area would bring the 50.0% retracement at $63.84 into focus, followed by the 50-day and 100-day SMAs at $64.20 and $64.45. Further resistance lies at the 38.2% retracement at $65.56 and the 23.6% level at $67.69.
On the downside, initial support appears at the $60.00 psychological mark, close to the 78.6% Fibonacci retracement at $59.68. A sustained break below this zone could expose the cycle low near $56.57, corresponding to the 100% retracement.
(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.
Disclaimer: For information purposes only. Past performance is not indicative of future results.