Silver Price Forecast: XAG/USD hits record highs near $69.00 on renewed Israel-Iran tensions

Silver price jumps higher on renewed tensions between Israel and Iran.
Israel raised concerns over Iran’s reconstitution of its nuclear facilities.
The Fed is unlikely to cut interest rates in the January policy meeting.

Sagar Dua FXStreet

Silver price (XAG/USD) trades 2.5% higher to near $69.00 during the Asian trading session on Monday, the highest level ever seen. The white metal strengthens as investors shift to a safe-haven fleet on renewed tensions between Israel and Iran.

According to a report from NBC News, Israeli officials have grown increasingly concerned that Iran is expanding production of its ballistic missile program and reconstituting its nuclear facilities, which were damaged by Israeli military strikes earlier this year, and are preparing to brief United States (US) President Donald Trump about options for attacking it again.

The scenario of geopolitical tensions increases demand for safe-haven assets, such as Silver.

On the Federal Reserve’s (Fed) monetary policy front, investors remain confident that the central bank will not reduce interest rates in the January policy meeting. Fed dovish expectations for the January meeting have not accelerated, despite the release of the soft US inflation data for November.

On Thursday, the US Consumer Price Index (CPI) data for November showed that the headline inflation cooled down to 2.7% year-on-year (YoY) from 3% in October. Economists expected the inflation data to come in higher at 3.1%. The so-called core reading, which strips out volatile food and energy items, dropped to 2.6% from estimates and the prior reading of 3%.

Silver technical analysis

XAG/USD trades higher around $69.02 at the start of the week. The 20-period Exponential Moving Average at $61.14 rises firmly and sits well below the price. The wide positive spread underscores a strong uptrend but also stretched conditions.

The 14-day Relative Strength Index (RSI) at 77.44 is overbought, and a cooling phase could follow. A rising trend line from $49.96 underpins the bullish bias.

With price extended above the 20-EMA, pullbacks could find support at $61.14, preserving the advance. Momentum remains robust, yet the overbought RSI may cap near-term gains; a break below the trend line near $65 would weaken the bias and open the door for a deeper retracement toward the December 3 high near $59.00. Looking up, the psychological level of $60.00 would act as major barrier.

(The technical analysis of this story was written with the help of an AI tool.)

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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