Silver Price Forecasts: XAG/USD bulls are eroding resistance at the $63.30 area
- XAG/USD hits fresh six-week highs at $63.91 on Friday, on track for its best weekly performance since February.
Fading hopes of immediate rate hikes by the Fed have boosted precious metals this week. - A clear break above $63.30 would confirm a trend shift.
Silver (XAG/USD) resumes its near-term bullish trend on Friday, after a brief hesitation on Thursday, reaching fresh six-week highs at $63.90, although it is still due to confirm the break of the resistance area at $63.30. The white metal is on track for its best weekly performance since February, favoured by fading expectations that the Federal Reserve (Fed) will hike interest rates in the coming months.
Investors, however, are likely to maintain a cautious mood on Friday, awaiting the release of the key Nonfarm Payrolls report. Analysts at Danske Bank forecast July's payrolls at 70k, with the Unemployment Rate unchanged at 4.2%. The bank notes that “most leading data still point towards solid labour market conditions, although weak labour supply growth also weighs on the employment growth outlook,” adding that “the unemployment rate remains the Fed's primary focus.”
Technical Analysis: A break of $63.30 would confirm a trend shift
XAG/USD trades at $63.78, sustaining a bullish near-term bias with bulls holding prices above the top of the last six weeks' trading range, at the $63.30 area. Momentum indicators, however, show an overextended rally, with the Relative Strength Index (14) at overbought levels around 74. A still-positive Moving Average Convergence Divergence (MACD) reading suggests that upside momentum is not yet exhausted.
A clear break above early July highs in the 63.30 area would confirm that Silver is on a bullish trend, aiming for the June 22 highs in the 67.00 area and the June 17 high, near $71.60. On the downside, any pullback below the mentioned $63.30 exposes Thursday's low in the $60.90 area, ahead of the August 3 low, at $56.57.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
