Silver Price Forecast: XAG/USD refreshes two-month high as US doubles bond buyback plan
- Silver price jumps to fresh two-month high at $67.33 as US Treasury Department announces plans to double bond buyback operations.
- Yields on long-dated maturing bonds have taken a sharp hit.
- The FOMC minutes showed that many policymakers support near-term interest rate hikes.
Silver price (XAG/USD) posts a fresh two-month high at $67.33 in the Asian trading session on Thursday. The white metal rallies as long-dated United States (US) Treasury Yields have declined significantly, following the announcement from the Treasury Department on Wednesday that it will double the size of buybacks for long-dated securities.
Such a move would increase the flow of the US Dollar (USD) into the economy, which has also weighed on the currency.
As of writing, 10-year US Treasury Yields trade vulnerably near Wednesday’s low of 4.64%. On Wednesday, 10-year US bond yields declined over 1.5%. 30-year US Treasury Yields are down almost 2% from Tuesday’s closing price to near 5.18%. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades close to its fresh seven-week low at 98.77.
Lower yields on interest-bearing assets improve the appeal of non-yielding assets, such as Silver.
Meanwhile, the Federal Open Market Committee (FOMC) minutes of the July meeting showed that many board members felt the need for interest rate hikes if inflation remains higher. Theoretically, the scenario bodes poorly for non-yielding assets.
Silver Technical Analysis
XAG/USD trades at $67.10, extending its advance well above the 20-period Exponential Moving Average (EMA) at $63.20 and reinforcing a bullish near-term bias. The metal is supported by the rising EMA, while the Relative Strength Index (RSI) at 61.48 stays in positive territory without yet reaching overbought, suggesting that upside momentum remains constructive but not stretched.
On the downside, immediate support is seen at the recent price pivot near $67.10, followed by firmer dynamic support at the 20-period EMA around $63.20, where buyers would be expected to defend the broader uptrend. Looking up, the white metal could extend its advance to $70.00, followed by the June 16 high at $71.19.
(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.