Silver Price Forecasts: XAG/USD eases below $78.00 but maintains a mild bullish stance
- XAG/USD pulls back to the $77.50 area after being rejected right ahead of the $79.00 level.
- Positive comments about a peace deal in Iran are keeping precious metals buoyed.
- An inverted Head & Shoulders pattern hints at a deeper recovery.
Silver (XAG/USD) failed to breach resistance at the $79.00 area earlier on Monday, but remains moderately bid, trading in the mid-$77.00s at the time of writing. Hopes of a US-Iran peace deal are weighing on the US Dollar in a calm Monday trading session and are keeping precious metals buoyed for now.
Investors are clinging to hopes of a negotiated end to the Middle East conflict, despite contradictory messages from US President Donald Trump. Trump suggested on Saturday that a deal is close, before affirming on Sunday that the US will maintain the blockade of the Strait of Hormuz until an agreement is reached and that he told negotiators “not to rush into a deal”.
Apart from that, markets are calm with trading volumes subdued amid a long weekend in the US and UK, due to the Memorial Day bank holiday.
Technical Analysis: A bullish Head and Shoulders hints at a deeper correction
XAG/USD trades at $77.51, with the near-term bias showing a mildly bullish stance, and price action forming an inverted Head & Shoulders figure, with key resistance at the $79.00 area.
Momentum indicators in the 4-hour charts are also supportive, with the Relative Strength Index (RSI) hovering in the mid-50s and the Moving Average Convergence Divergence (MACD) holding in positive territory, hinting that dips could remain shallow while supports are respected.
The resistance area between the May 19 high, at the $78.90 area, and the 38.2% Fibonacci retracement of the mid-May bearish cycle, around $79.20, is the main challenge for bulls. A breach of that area would shift the focus towards the $80.00 psychological level and a previous support zone, at $83.00, which is also the 61.8% Fibonacci retracement of the previously mentioned cycle.
On the downside, the May 21 highs around $77.00 are providing support so far on Monday ahead of Friday's low in the area of $75.00. Key support is the May 19 low near $73.10.
(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
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.
