Silver price forecast: XAG/USD bullish turnaround grows legs
- Spot Silver is up over 6% on Monday, breaking through $80.00.
- XAG is shrugging off a sharp pullback from record highs.
Silver pulled back sharply from its all-time high near 121.67 in late January, dropping over 40% before finding support around the 64.00 zone in early February. The daily chart shows a falling wedge pattern forming during this correction, with price testing the lower boundary multiple times before bouncing back toward 78.00. The 50-day Simple Moving Average (SMA) sits at 75.65, providing dynamic support, while the 200 SMA at 49.13 remains well below current price action, confirming the longer-term bullish structure still holds. The Relative Strength Index (RSI) recovered from oversold conditions below 30 and now reads 53.69, suggesting neutral momentum as Silver consolidates between 70.00 and 85.00.
The 4-hour timeframe displays a potential bullish reversal setup as price broke above the upper trendline of the descending channel near 78.00. The Moving Average Convergence-Divergence (MACD) crossed above the signal line with a widening positive histogram, signaling strengthening upside momentum. Immediate resistance stands at 86.25 where the 200-period SMA on the 4-hour chart converges with the 38.2% Fibonacci retracement of the recent decline. A clean break above this confluence zone opens the path toward 92.95, the 50% retracement level, with extended targets at 101.64 if bullish momentum accelerates. Key support remains at 75.00, and failure to hold this level would bring 71.30 back into focus.
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
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
