Silver Price Forecast: Bearish Pressure Mounts As $50 Comes Into Focus

• Silver extends losses as investors favor government bonds over precious metals.

• XAG/USD remains vulnerable to further losses as bearish momentum persists.

• RSI approaches oversold territory as sellers eye the psychological $50 mark.

Silver (XAG/USD) slides to fresh yearly lows on Friday after plunging 5.8% on Thursday as concerns over AI-related investments weighed on equities, but failed to spark safe-haven demand for Silver as investors favour government bonds. Some traders may also be selling precious metals to offset losses in stocks. At the time of writing, Silver trades around $53.89, on track for a second consecutive weekly decline.

The white metal is now down roughly 55% from its January peak near $121. The decline has largely been driven by rising energy costs linked to the Middle East war, which began in late February, adding to inflation pressures and prompting major central banks, particularly the Federal Reserve (Fed), to raise interest rates. Higher borrowing costs increase the opportunity cost of holding non-yielding assets such as Silver.

Next week’s Fed meeting could help determine whether Silver extends its decline or stages a recovery. The US central bank is widely expected to leave interest rates unchanged after raising them by 25 basis points (bps) in September. However, policymakers’ commitment to returning inflation to the 2% target could keep another rate hike before year-end on the table. Markets price in an 80% chance of a December increase, according to the CME FedWatch Tool.

Technical analysis

On the daily chart, XAG/USD extends its decline below the descending channel floor and remaining well under the 100-day Simple Moving Average (SMA) and the 200-day SMA, which together underline a firmly bearish near-term bias.

Momentum reinforces this tone as the Relative Strength Index (RSI) hovers near oversold at 31, while the Moving Average Convergence Divergence (MACD) indicator stays below zero with a negative reading and a weakly trending backdrop highlighted by the Average Directional Index at 30.

On the topside, initial resistance appears at $55, closely followed by the broken channel lower boundary near $56.50, before the $60 horizontal cap, with the upper edge of the bearish channel and the 100-day SMA at $62 forming a dense barrier ahead of the $67 swing high and ultimately the 200-day SMA at $71.

On the downside, meaningful support is only seen at the $50 horizontal level, leaving XAG/USD vulnerable to further declines while price holds beneath the stacked overhead resistances.