Silver Price Forecast: XAG/USD remains capped below $31.00, further consolidation cannot be ruled out

Silver price climbs to around $30.90 in Tuesday’s early European session, up 1.24% on the day.
Silver crosses above the 100-day EMA, but further consolidation cannot be ruled out with the neutral RSI indicator.
The first upside barrier is located at $31.68; the initial support level is seen at $30.50.

Lallalit Srijandorn FXStreet

The Silver price (XAG/USD) gains traction to near $30.90 during the early European session on Tuesday. The white metal edges higher due to the potential stimulus measures from China and ongoing geopolitical uncertainty.

However, JPMorgan analysts expect a near-term downside for base metals in early 2025 due to potential US tariffs on Chinese goods but see a recovery later in the year, bolstered by stronger Chinese economic stimulus and improved valuations.

According to the daily chart, Silver is set to resume its upside as the price crosses above the key 100-day Exponential Moving Average (EMA). However, further consolidation cannot be ruled out as the 14-day Relative Strength Index (RSI) hovers around the midline, indicating the neutral momentum of the white metal.

The immediate resistance level for XAG/USD emerges near the upper boundary of the Bollinger Band of $31.68. Any follow-through buying above this level could pave the way to the $32.90-$33.00 zone, representing the psychological level and the high of November 5. The additional upside filter to watch is $34.55, the high of October 29.

In the bearish event, sustained trading below $30.50, the 100-day EMA, could see a drop to $29.65, the low of November 28. A breach of the mentioned level could expose $27.70, the low of September 9.

Silver price (XAG/USD) Daily Chart

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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