Silver Price Forecast: XAG/USD recovery beyond $61.00 faces selling risk
- Silver attracts some buyers after touching a fresh low since August 5 earlier this Tuesday.
- The oversold daily RSI prompts some intraday short-covering, warranting caution for bulls.
- Any further recovery move could be seen as a selling opportunity and fade rather quickly.
Silver (XAG/USD) registers a modest recovery from the $60.30 area, or the lowest level since August 5, touched earlier this Tuesday, though it lacks follow-through. Nevertheless, the white metal sticks to intraday gains through the early European session and currently trades just below the $61.00 mark, up over 0.50% for the day.
From a technical perspective, the Relative Strength Index (RSI) hovers near oversold levels around 28, hinting at stretched downside conditions and prompting some intraday short-covering. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator stays in negative territory with a weak profile, not yet signaling a confirmed reversal. Moreover, the XAG/USD holds well beneath the 200-period Exponential Moving Average (EMA) at $64.64, maintaining a bearish near-term tone.
Hence, any subsequent move up is likely to confront initial resistance near the $61.00 round figure. Some follow-through buying should pave the way for a further recovery to the $61.80-$61.85 intermediate hurdle, before the XAG/USD climbs further beyond the $62.00 and aims to test the $62.40-$62.45 horizontal support breakpoint. The latter should act as a key pivotal point, and sustained strength beyond it is needed to back the case for any further appreciating move for the white metal.
On the downside, weakness there is no meaningful support, and traders may look to the $60.00 psychological round number to gauge the next leg of a directional move. A convincing break should pave the way for a fall to the $59.40-$59.35 support before the XAG/USD slides further towards the $59.00 mark. If the metal extends its decline, bears might then aim to challenge the August monthly low, around the $56.60-$56.55 zone, with some intermediate support near the $57.00 round figure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD daily 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.
