Silver Price Forecast: XAG/USD Lacks Direction As RSI, ADX Signal Weak Momentum

Silver (XAG/USD) holds firm on Friday, supported by a modest pullback in the US Dollar (USD) after its strong weekly rally. At the time of writing, Silver trades around $64.30 but remains on track for a weekly loss.

The softer US Dollar offers some relief, although the upside remains limited as markets raise bets on another Federal Reserve (Fed) rate hike after last week’s 25-basis-point (bps) increase. Higher borrowing costs weigh on non-yielding assets such as Silver and increase the appeal of interest-bearing assets. US Treasury yields climbed to fresh multi-year highs this week.

The CME FedWatch Tool shows around a 66% probability of another rate increase at the October meeting. Next week’s US Personal Consumption Expenditures (PCE) inflation report, ISM Manufacturing Purchasing Managers’ Index (PMI) and Nonfarm Payrolls (NFP) data could influence those expectations.

Despite the fundamental headwinds, Silver’s technical picture looks somewhat constructive. Momentum indicators are largely neutral, suggesting that neither buyers nor sellers are in firm control as XAG/USD continues to move within a range established over the past month.

Technical analysis

On the daily chart, Silver remains in a consolidation phase, with price moving between the contracted Bollinger Bands. The narrow band spread points to subdued volatility and suggests that a clearer directional move may require a breakout from the current range.

The Relative Strength Index (RSI) at 47 hovers around the midline, hinting at balanced momentum, while the Moving Average Convergence Divergence (MACD) stays slightly negative, suggesting modest downside pressure within an overall range as trend strength, per the Average Directional Index (ADX) at 10, remains weak.

On the topside, initial resistance is located at the Bollinger middle band near $65, followed by the upper band at $67, before more significant overhead supply emerges at the horizontal barriers of $70 and $75.

On the downside, immediate support is seen at the Bollinger lower band around $62, ahead of the horizontal floors at $60 and then $55, where buyers would be expected to reassert themselves if the current consolidation breaks lower.