Silver Price Forecast: XAG/USD bears have the upper hand below $53.00 pivotal resistance
- Silver regains positive traction following the previous day’s pullback from a one-week high.
- Hawkish Fed expectations favor USD bulls and might cap meaningful upside for XAU/USD.
- The mixed technical setup warrants some caution before positioning for further appreciation.
Silver (XAG/USD) attracts some dip-buyers during the Asian session on Wednesday, reversing a part of the previous day's retracement slide from the $53.70-$53.75 region, or a one-and-a-half-week top. The white metal currently trades near mid-$52.00s, up around 1.80% for the day, though the upside potential seems limited amid mixed cues.
Tuesday's hotter-than-expected US consumer inflation figures reaffirmed bets for further policy tightening by the Federal Reserve (Fed). Adding to this, comments from Fed Governor Christopher Waller prompted traders to price in the possibility of a jumbo 50-basis-point (bps) rate hike in December. The hawkish outlook might continue to act as a tailwind for the US Dollar (USD), which, in turn, should act as a headwind for USD-denominated commodities, including the XAG/USD.
From a technical perspective, the commodity keeps a capped tone beneath the 100-period Simple Moving Average (SMA) on the 4-hour chart, at $53.05, and all visible Fibonacci retracement levels of the $71.09-$48.61 decline. Meanwhile, the Relative Strength Index (RSI) at 52.62 sits just above the neutral line, and the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting that rebounds are vulnerable while the XAG/USD stays below the $53.00 hurdle.
A sustained strength beyond, however, could lift the white metal to the 23.6% Fibo. retracement at $53.92. More meaningful barriers are pegged at the 38.2% level at $57.20 and the 50% retracement at $59.85. On the downside, the next notable support is the cycle low at $48.61, where a break would likely open the door to a deeper corrective phase despite the currently neutral short-term momentum profile.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD 4-hour chart
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.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
