Silver Price Forecast: XAG/USD slides below $81.50; 38.2% Fibo. breakdown comes into play

Silver extends this week’s retracement slide from an over one-month high.
An intraday break below the 38.2% Fibo. backs the case for further losses.
The broader technical setup still seems tilted in favor of bearish traders.

Haresh Menghani FXStreet

Silver (XAG/USD) attracts some follow-through selling for the second consecutive day on Friday and retreats further from over a one-month high, around the $89.35-$89.40 region, touched earlier this week. The white metal weakens below mid-$81.00s during the Asian session and remains well within striking distance of the weekly trough.

From a technical perspective, an intraday breakdown below the 38.2% Fibonacci retracement level of the recent upswing from sub-$71.00 levels favors the XAG/USD bears amid cooling momentum indicators. In fact, the Relative Strength Index (RSI) is drifting toward the neutral 40 area, and the Moving Average Convergence Divergence (MACD) is turning more negative, hinting that bullish pressure is fading in the near term.

The XAG/USD, however, holds above the 50% retracement and the 100-period Simple Moving Average (SMA), which together suggest that the broader uptrend remains intact despite the recent pullback. Hence, any subsequent fall is likely to find support at $80.11 (50% level), ahead of a structural band formed by the 61.8% retracement at $77.95 and the 100-period SMA at $77.83, which, if broken, should pave the way for deeper losses.

On the topside, initial resistance is located at the 38.2% Fibo. retracement at $82.27, followed by the 23.6% level at $84.94, while a break there would expose the cycle high at $89.26.

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

XAG/USD 4-hour 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

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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