Silver Price Forecast: XAG/USD’s rally hits pause near $59, upside bias remains intact
- Silver price retraces to near $58.00 as the two-week long rally hits pause.
- Firm Fed dovish expectations to keep the Silver price broadly on the frontfoot.
- The US private sector data showed that the laborforce was reduced by 32K in November.
Silver price (XAG/USD) trades 0.8% lower to near $58.00 during the late Asian trading session on Thursday from its all-time high around $59.00 posted on Wednesday. The white metal corrects as the two-week rally hits pause, while the outlook remains firm as traders are increasingly confident that the Federal Reserve (Fed) will cut interest rates in its monetary policy meeting on Wednesday.
Lower interest rates by the Fed bode well for non-yielding assets, such as Silver.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December policy meeting is 89%.
Fed dovish speculation remains intensified as United States (US) labour market conditions seem to be deteriorating further. The US ADP Employment Change data showed on Wednesday that 32K employees were laid-off in November, while economists anticipated addition of 5k fresh workers.
Weakening US labour demand has also weighed on the US Dollar (USD). During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, struggles to hold its fresh monthly low of 98.80 posted on Wednesday.
Silver technical analysis
In the daily chart, XAG/USD trades around $58.00 during late Asian trading hours. Price holds well above the rising 20-day Exponential Moving Average (EMA) at $53.61, keeping the short-term uptrend intact. The 20-day EMA has been climbing steadily, reflecting persistent buying interest.
RSI at 71.61 is still overbought after pulling back from 75.41, which could curb immediate upside as momentum cools. The moving average underpins the downside, with dips expected to attract buyers.
Trend momentum remains firm as the 20-day EMA slope continues to steepen. A pause to digest gains would reduce overbought pressure and would keep the bias positive if price stays above the average. RSI above 70 confirms strong momentum and a potential pullback would be viewed as corrective. Overall, continuation would stay favored as long as daily closes hold above the 20-day EMA.
(The technical analysis of this story was written with the help of an AI tool)
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
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
