Silver Price Forecast: XAG/USD trades with positive bias around mid-$30.00s, weekly high

Silver scales higher for the second straight day and climbs back closer to the weekly top.
The technical setup favors bulls and supports prospects for a further appreciating move.
Any subsequent move up might continue to face stiff resistance near the 100-day SMA.

Haresh Menghani FXStreet

Silver (XAG/USD) attracts buying for the second straight day on Wednesday and trades near the top end of its weekly range, around mid-$30.00s during the first half of the European session, up over 0.40% for the day.

Meanwhile, technical indicators on the daily chart have again started gaining positive traction and support prospects for further appreciating move. That said, any subsequent move up might continue to confront stiff resistance near the $31.00 mark, or the 100-day Simple Moving Average (SMA). The said barrier should act as a key pivotal point for the XAG/USD, which if cleared decisively might trigger a short-covering rally.

The subsequent move up could extend towards the next relevant hurdle near the $31.45-$31.50 area en route to the $32.00 mark and the December monthly swing high, around the $32.30 region. Some follow-through buying will suggest that the corrective decline from a multi-year peak touched in October 2024 has run its course and pave the way for additional gains.

On the flip side, the 200-day SMA, currently pegged just ahead of the $30.00 psychological mark, should act as an immediate strong support. A convincing break below could make the XAG/USD vulnerable to retesting the weekly swing low, around the $29.70 region touched on Monday. The downward trajectory could extend further towards the $29.10-$29.00 area en route to
the $28.75-$28.70 region, or a multi-month low touched in December.

Silver 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

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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