Silver Price Forecast: XAG/USD bulls await break above $70.00 amid mixed setup

Silver seesaws between tepid gains and minor losses as traders await the US PCE.
The recent repeated failures to break out above $70.00 warrant caution for bulls.
The technical setup backs case for the emergence of dip-buyers ahead of $66.50.

Haresh Menghani FXStreet

Silver (XAG/USD) continues its struggle to make it through the $70.00 psychological mark and extends its two-way price moves through the first half of the European session on Wednesday. The white metal currently trades just above mid-$68.00s, nearly unchanged for the day, as traders keenly await the release of the US Personal Consumption Expenditures (PCE) Price Index.

The XAG/USD maintains a bullish near-term bias following last week's breakout above the $66.55-$66.60 horizontal resistance. Moreover, the commodity holds well above the 200-period Simple Moving Average (SMA) on the 4-hour chart, which underpins the broader uptrend. Despite this constructive positioning, the Moving Average Convergence Divergence (MACD) indicator is below zero with a slightly negative reading, hinting at waning upside momentum.

Meanwhile, the Relative Strength Index (RSI) around 53 suggests neutral conditions after cooling from previously overbought levels. Nevertheless, the XAG/USD could find some support near mid-$67.00s ahead of the $67.00 mark and the $66.60-$66.55 resistance breakpoint. Any further slide is likely to attract buyers and remain limited near the 200-period SMA at $61.58, which marks the main underlying demand zone as long as price stays comfortably above it.

On the top side, bulls might await sustained strength and acceptance above the $70.00 mark before positioning for any further gains towards the $71.00 round figure and the $71.55 hurdle. A sustained move beyond the latter would set the stage for further gains beyond the $72.00 mark, towards the $72.55 intermediate resistance en route to $73.00 and the $73.40 region.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

XAG/USD 4-hour chart

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.

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