Silver Price Forecast Shows XAG/USD Near $61 as Oil Selloff Eases Rate Fears

Key Takeaways

• Silver advanced approximately 1.8% to around $60.95 during Wednesday’s Asian session, approaching its monthly high near $61.
• Falling oil prices reduced concerns about inflation and further central-bank interest-rate increases, supporting demand for non-yielding silver.
• Markets remain uncertain whether negotiations involving Iran, Oman and the United States will restore unrestricted navigation through the Strait of Hormuz.
• Investors are awaiting July’s ADP Employment Change and Friday’s U.S. Nonfarm Payrolls report for new signals about Federal Reserve policy.

Silver prices climbed approximately 1.8% during early Asian trading on Wednesday, bringing XAG/USD back toward its monthly high near $61. The precious metal benefited from falling energy prices and renewed optimism that diplomatic talks could reduce disruption to shipping through the Strait of Hormuz.

WTI crude extended its decline, falling another 0.8% to approximately $73.80 per barrel. Brent crude also moved lower after U.S. officials suggested that an agreement to reopen the strategic waterway could be reached within days.

Falling Oil Prices Support Silver Demand

Lower oil prices can reduce inflationary pressure by bringing down transportation, manufacturing and household energy costs. If the decline persists, central banks may face less pressure to raise interest rates further.

That environment can benefit non-yielding assets such as silver. Higher interest rates generally increase the opportunity cost of holding precious metals because they do not provide regular interest payments. Conversely, reduced expectations for monetary tightening can make silver relatively more attractive.

The latest oil selloff followed comments from U.S. Treasury Secretary Scott Bessent, who said in a CNBC interview that an agreement with Iran to reopen the Strait of Hormuz could be reached as early as Tuesday or Wednesday.

Other U.S. officials have also reported progress, although no final agreement has been announced. The proposed arrangement reportedly involves ships entering the Persian Gulf through an Iranian-controlled route and leaving through waters overseen by Oman.

The Strait of Hormuz is a critical passage for approximately one-fifth of global oil supplies. Disruption to the waterway has raised shipping costs, limited tanker traffic and added a geopolitical premium to energy prices.

Freedom of Navigation Remains Uncertain

Despite signs of diplomatic progress, financial markets remain uncertain about whether an agreement would restore unrestricted commercial navigation.

Iran has confirmed negotiations with Oman over a temporary shipping arrangement but has not acknowledged direct talks with the United States. Tehran has also proposed security and environmental charges for vessels using an Iranian-controlled route, an idea opposed by Washington.

The United States maintains that the strait should remain an international waterway and that no individual country should control commercial passage or impose tolls.

A temporary agreement could increase regional oil exports and place additional downward pressure on crude prices. However, renewed military escalation or further attacks on commercial ships could quickly reverse the oil selloff and revive inflation concerns.

For silver, that uncertainty creates competing forces. Lower energy prices support the metal by reducing rate-hike expectations, while continuing geopolitical tensions can increase demand for precious metals as defensive assets.

U.S. Employment Reports Become the Next Market Catalyst

Investors are now turning their attention to U.S. labor-market data, beginning with the ADP Employment Change report for July. The private-sector employment figures are scheduled for release at 12:15 GMT on Wednesday.

Friday’s official Nonfarm Payrolls report will carry greater weight because it includes employment, unemployment and wage data that could influence the Federal Reserve’s next policy decision.

Deutsche Bank economists expect the U.S. economy to have added approximately 65,000 jobs in July, modestly above June’s 57,000 increase. Private payroll growth is also forecast at 65,000, compared with 49,000 previously.

The bank expects the unemployment rate to remain at 4.2%, although stronger labor-force participation could lift it to 4.3%. Average hourly earnings are projected to rise 0.3% month over month, keeping nominal income growth near 4.4% annually.

June’s official report showed that nonfarm payrolls increased by only 57,000, while unemployment edged down to 4.2%. The lower jobless rate was partly caused by a decline in labor-force participation rather than a substantial improvement in hiring.

A weaker-than-expected July report could reduce expectations for further Fed tightening and support silver. Strong employment and wage growth could have the opposite effect by reinforcing concerns that inflation will remain elevated.

Silver Technical Analysis

Source from: https://www.fxstreet.com/

XAG/USD’s move toward $60.95 has taken the price above its 20-day exponential moving average at approximately $59.05, giving the short-term technical structure a constructive bias.

The EMA is now the nearest support level. A pullback that remains above $59.05 could attract buyers and preserve the current recovery. A decisive break below it would weaken the near-term outlook and expose the July 17 low at $54.77.

The Relative Strength Index stands near 53.23, placing it in neutral-to-positive territory. The reading indicates that bullish momentum is improving without showing overbought conditions, leaving room for additional gains if buying pressure continues.

On the upside, $61 represents the immediate psychological and technical barrier. If silver stabilizes above that level, XAG/USD could extend its advance toward the July 6 high of $63.28.

Failure to establish support above $61 could result in consolidation between the $59.05 EMA and the current monthly high. The next major move will likely depend on developments surrounding the Strait of Hormuz and whether U.S. employment data strengthen or weaken expectations for further Federal Reserve rate increases.