Silver Price Forecast: XAG/USD bulls look to build on momentum beyond $79.00
- Silver attracts strong follow-through traction for the second straight day on Tuesday.
- The technical setup favors the XAG/USD bulls and backs the case for additional gains.
- Any meaningful corrective slide could find support near $78.00 resistance breakpoint.
Silver (XAG/USD) builds on the previous day's positive move and gains strong follow-through traction for the second straight day on Tuesday. The momentum lifts the white metal to a one-week high heading into the European session, with bulls looking to build on the strength further beyond the $79.00 round figure.
The overnight move back above the 100-hour Simple Moving Average (SMA), and Tuesday's intraday breakout through the $78.00 horizontal hurdle could be seen as a key trigger for the XAG/USD bulls. The Moving Average Convergence Divergence (MACD) line stands above the Signal line and in positive territory, with the histogram widening, reinforcing strengthening bullish momentum. The RSI (14) at 71.20 is overbought, which could cap immediate gains as intraday conditions stretch.
The rising SMA keeps the near-term bias tilted higher, and pullbacks would remain contained while price trades above it. Ongoing positive MACD momentum and an expanding histogram would support an extension of the uptrend. RSI above 70 warns of stretched momentum; a dip in price toward the day open at $76.33 would help ease overbought pressure and preserve a healthier bullish profile. Moreover, the 100-hour SMA at $74.45 could further offer dynamic support.
(The technical analysis of this story was written with the help of an AI tool)
XAG/USD 1-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.
