Silver Price Forecasts: XAG/USD confirms a bullish H&S targeting $67.17
- XAG/USD extends gains for the second consecutive day, nearing seven-week highs at the $65.00 area.
- A negative surprise on US Nonfarm Payrolls cooled Fed tightening expectations further and boosted precious metals on Friday.
- The technical picture shows an inverted Head & Shoulders pattern.
Silver (XAG/USD) appreciates for the second consecutive day on Monday, trading around $64.30 after confirming above July’s peak in the $63.30 area. The pair rallied on Friday following downbeat US Nonfarm Payrolls data, to close its best weekly performance since February, and maintains its bullish tone intact this week, with the US Dollar Index (DXY) depressed below the key 100.00 level.
Precious metals extended their recovery on Friday as the unexpected decline in July’s US Nonfarm Payrolls data cooled expectations of Federal Reserve (Fed) rate hikes further. Data from the Bureau of Labour Statistics revealed that net jobs dropped by 23K last month, against market expectations of an 80K increase, and employment growth figures from the previous two months were revised sharply lower.
Futures markets reduced the odds for a September rate hike to 44% from 67% one week ago, according to the CME Group’s FedWatch Tool, which sent the US Dollar tumbling across the board. Investors will be looking at the US Consumer Prices Index (CPI) figures, due on Wednesday, to confirm those views.
Technical Analysis: The next target is the $67.15 area
XAG/USD has broken above the $63.30 area, confirming a bullish Head & Shoulders (H&S) figure, a common pattern for trend shifts. Momentum indicators in the daily chart are supporting the bullish view, as the Relative Strength Index (14) trends higher within the low-60s and the Moving Average Convergence Divergence (MACD) line advances further into positive territory, suggesting buyers retain control.
On the topside, the measured target of the H&S pattern is at the June 22 high at $67.17. Further up, the 200-day SMA meets the mid-June high in the mid $77s. A bearish reaction below the mentioned $63.30, on the contrary, would expose August 6 and 7 lows around $61.00 ahead of the August 5 low, at $59.40.
(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.
