Silver Price Forecast: XAG/USD bulls have the upper hand above $59.00 confluence
- Silver attracts some dip-buyers on Thursday, though it lacks any follow-through.
- The technical setup favors bulls and backs the case for further near-term gains.
- Acceptance below $59.00 is needed to negate the broader constructive outlook.
Silver (XAG/USD) attracts fresh buyers near the $58.25-$58.20 zone during the Asian session on Thursday, stalling the previous day's modest pullback from the $61.00 neighborhood, or an over two-week high. The white metal, however, lacks follow-through and currently trades just above the mid-$59.00s, down over 0.40% for the day.
This week's breakout through the $59.00 confluence – comprising the 100-period Simple Moving Average (SMA) on the 4-hour chart and the 23.6% Fibonacci retracement level of the fall from the June 17 high – was seen as a key trigger for XAG/USD bulls. The Relative Strength Index (RSI) at 61.21 stays in positive territory, while the Moving Average Convergence Divergence (MACD) histogram remains mildly positive. Momentum indicators together suggest that upside momentum is still constructive despite the latest pause, backing the case for a further near-term appreciating move.
In the meantime, any subsequent move up is likely to confront initial resistance at the 38.2% Fibo. retracement at $61.31. This is followed by the 50.0% level at $63.28 and the 61.8% retracement at $65.25, with the 78.6% barrier at $68.05 acting as a broader cap. On the downside, immediate support is seen around the 100-period SMA/23.6% Fibo. level confluence at $58.99, while a deeper pullback would expose the structural anchor of the current cycle near $54.94.
(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.
