Silver Price Forecast: XAG/USD extends decline to near $63 amid continued energy supply risks

Silver price (XAG/USD) slipped 0.5% to around $63.00 in the Asian trading session on Wednesday. This decline follows Tuesday's dip, driven by growing concerns over inflation due to persistent energy supply disruptions. Currently, WTI Oil is near its two-week high at $85.11, causing global inflation expectations to rise and sparking fears of interest rate hikes by central banks.

This dampens the attractiveness of non-yielding assets such as Silver. Energy supply issues appear unlikely to be resolved soon, as U.S. President Donald Trump stated there are "no discussions or conversations" with Iran. Investors are watching the Federal Open Market Committee (FOMC) minutes from the July policy meeting, expected at 18:00 GMT, for insights into the Federal Reserve's (Fed) stance on interest rates.

For now, the FedWatch tool indicates a rate hold for the September meeting. The CME FedWatch tool currently shows a neutral-to-positive Relative Strength Index (14) at 52.59, signaling ongoing bullish momentum, though not overly exuberant. On the downside, immediate support lies at the 20-day Exponential Moving Average (EMA) at $62.41, followed by the $60 level.

On the upside, the August 10 high near $66 serves as a key resistance point. Silver is a widely traded precious metal, often used as a store of value and hedge against inflation, though its appeal to investors is less pronounced compared to Gold. Its price can be influenced by various factors, including geopolitical tensions, recession fears, the strength of the US Dollar, investment demand, mining supply, and recycling rates.

Silver's usage in industries like electronics and solar energy, as well as its role in jewelry demand, particularly in India, can also impact prices. Like Gold, Silver is a safe-haven asset, but to a lesser extent. Its price movements often mirror Gold's, particularly the Gold/Silver ratio, which can indicate relative valuation.