Silver Price Forecast: XAG/USD holds bullish below $70.00/two-month high set on Friday
- Silver kicks off the new week on a subdued note and oscillates in a range below a two-month high.
- Last week’s breakout through key technical barriers favors bulls and backs the case for further gains.
- A move beyond the 50% Fibo. near the $72.00 mark is needed to reaffirm the constructive outlook.
Silver (XAG/USD) seesaws between tepid gains and minor losses around the $69.00 mark through the Asian session on Monday. The white metal, however, remains within striking distance of a two-month high, around the $70.00 psychological mark touched on Friday, and seems poised to appreciate further.
The XAG/USD holds a near-term bullish bias following last week's breakout above the $66.65-$66.70 horizontal resistance and the 38.2% Fibonacci retracement of the May-July decline. Moreover, the white metal holds above the 200-period Simple Moving Average (SMA) on the 4-hour chart, which, along with positive oscillators, underpins the advance.
The Moving Average Convergence Divergence (MACD) stays marginally positive, hinting that the upward trajectory is still in place but moderating. Furthermore, the Relative Strength Index (RSI) near 66 suggests strong buying pressure, though the approach toward overbought territory could slow the pace of gains.
Hence, a subsequent move up might confront initial resistance at the 50.0% retracement at $71.95, ahead of the 61.8% level at $76.08, with further barriers at the 78.6% retracement at $81.97 and the cycle high at $89.47. On the downside, immediate support is seen at the reclaimed 38.2% Fibo. retracement at $67.81, followed by the 23.6% level at $62.70 and the 200-period SMA at $60.93, while a deeper setback would expose the structural floor anchored around $54.43.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
