Silver Price Forecast: XAG/USD corrects from one-month top, bullish bias intact near $80.00
- Silver retreats after touching a nearly one-month high during the Asian session on Wednesday.
- The overnight breakout through key barriers favors bulls and backs the case for further gains.
- Any further corrective slide might still be seen as a buying opportunity and remain cushioned.
Silver (XAG/USD) climbs to a nearly one-month peak during the Asian session on Wednesday, though it struggles to build on the momentum further beyond the $81.00 mark. The white metal, however, sticks to modest intraday gains and currently trades around the $80.00 psychological mark, still up 1.0% for the day.
From a technical perspective, the overnight breakout through the 200-period Simple Moving Average (SMA) and a subsequent move beyond the 50% Fibonacci retracement level of the March downfall were seen as key triggers for the XAG/USD bulls. Momentum conditions are strong but stretched, with the Relative Strength Index (14) at 72.14 in overbought territory and the Moving Average Convergence Divergence (MACD) hovering in positive ground. This suggests upside pressure persists even as the risk of a corrective pause rises.
On the topside, initial resistance is now seen at the 61.8% Fibo. retracement level at $82.81, ahead of a higher barrier at the 78.6% retracement at $88.73 and the cycle high region around at $96.26. On the downside, immediate support is aligned at the 50.0% retracement at $78.66, followed by the 200-period SMA at $77.86. A deeper pullback would expose the 38.2% Fibo. retracement at $74.51, while a more pronounced weakness toward $69.37 would still leave the broader bullish recovery intact.
Nevertheless, the XAG/USD maintains a clear bullish bias, and the constructive tone is reinforced while it grinds higher within the broader recovery off the cycle low near $61.07.
(The technical analysis of this story was written with the help of an AI tool.)
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.
