Silver Price Forecast: XAG/USD consolidates breakout near $39.00, eyes fresh multi-year highs
- Silver consolidates gains on Monday as the US Dollar and Treasury yields stabilize in the aftermath of Powell’s speech at Jackson Hole.
- Fed Chair Powell’s Jackson Hole speech reinforced expectations for a September rate cut, weighing on the US Dollar.
- XAG/USD holds above key support levels, with the 100-period SMA and former triangle top offering a strong floor near $38.00.
Silver (XAG/USD) is holding firm near a one-month high on Monday, consolidating the gains that followed a strong bullish breakout on Friday. The metal surged above the upper boundary of a symmetrical triangle formation after Federal Reserve (Fed) Chair Jerome Powell delivered dovish remarks at the Jackson Hole Symposium, reinforcing expectations for a September rate cut. The subsequent drop in the US Dollar and Treasury yields fueled a broad-based rally in precious metals, with Silver climbing to its highest level since July 25.
At the time of writing, XAG/USD is trading around $38.90, having posted an intraday low of $38.57 during the European session. The metal appears to be digesting recent gains as market participants reassess Fed policy outlook and await fresh catalysts. Despite Monday's sideways movement, the broader technical picture remains tilted in favor of the bulls.
From a technical perspective, the breakout above the triangle’s upper trendline and the psychological $38.00 barrier marks a significant shift in near-term momentum. The move also confirmed a continuation of the broader uptrend that had been in consolidation for most of August.
Momentum indicators continue to favor the bulls. The Relative Strength Index (RSI) has risen to 68, near overbought territory, but still suggesting strong underlying demand. The Moving Average Convergence Divergence (MACD) also shows a positive crossover above the signal line, with rising histogram bars that confirm bullish momentum is building.
Looking ahead, a sustained move above Friday’s high at $39.06 could open the door for a test of the next key resistance at $39.53, which marks the multi-year peak. A breakout above this zone would likely reinforce bullish conviction and open the door for a run toward the psychological $40.00 level.
On the downside, initial support is seen at $38.50, followed by the 100-period SMA around $37.98, which closely aligns with the upper boundary of the broken triangle pattern. A drop below this confluence support could invite a retest of the $37.50 pivot zone. While this level triggered the recent bounce, a sustained break beneath it would mark a bearish shift and expose Silver to further downside toward the $37.00 level.
Overall, the technical outlook for XAG/USD remains bullish in the near term, supported by strong breakout confirmation, favorable macro conditions, and rising momentum. As long as Silver holds above $38.00, dips are likely to be viewed as buying opportunities, with scope for the rally to resume toward multi-year highs in the days ahead.
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
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
