Silver Price Forecast: XAG/USD extends record-setting rally to $99.00 amid fresh breakout
- Silver gains strong follow-through positive traction for the second straight day on Friday.
- A breakout through a one-week-old ascending channel backs the case for further gains.
- Overbought conditions on the short-term chart warrant some caution for bullish traders.
Silver (XAG/USD) continues scaling new all-time highs for the second consecutive day and climbs to the $99.00 mark during the Asian session on Friday. The parabolic rise seems rather unaffected by easing US-EU tensions over Greenland and extremely overstretched conditions, suggesting that the path of least resistance for the white metal remains to the upside.
The ascending channel from $86.67 underpins the uptrend, with its upper boundary at $97.22 now breached; a sustained hold above this barrier would preserve the breakout bias. The Moving Average Convergence Divergence (MACD) stands in positive territory and continues to rise, suggesting strengthening upside momentum. Moreover, the 200-period Simple Moving Average (SMA) on the 4-hour chart slopes higher at $91.47, and the XAG/USD holds above it, keeping the intraday tone bullish.
However, the Relative Strength Index (RSI) at 76.98 is overbought and could temper immediate gains. Pullbacks would be cushioned by the rising 200-period SMA at $91.47, while deeper setbacks meet the ascending channel’s lower boundary at $90.16. The MACD’s positive stance above zero reinforces buyers’ control. RSI moderation from overbought would aid consolidation.
Failure to keep above $97.22 would risk a return into the channel, whereas continued acceptance above that line would leave the path open for further extension.
(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.
