Silver Price Forecasts: XAG/USD holds gains near $66.00 on further Fed easing hopes

Silver remains above $65.50 after hitting record highs at $66.64.
Weak US labour data and Fed easing hopes are supporting precious metals on Wednesday.
XAG/USD’s bulls are likely to find resistance at $66.80.

Guillermo Alcala FXStreet

Silver’s (XAG/USD) is standing comfortably at the upper range of the $65.00s on Wednesday’s European session, after having hit fresh all-time highs at $66.54 earlier today as delayed US labour figures failed to boost confidence in the US economy.

Nonfarm Payroll figures released on Tuesday revealed that net employment fell by 105,000 in October before posting a larger-than-expected recovery, with a 64,000 increase in November. The Unemployment rate, however, rose to a four-year high of 4.6% wage growth moderated further.

These figures kept bets of a March rate cut practically unchanged, at 42%, and investors are now waiting for the release of November's US Consumer Prices Index, due on Friday, for a better assessment of the Fed's monetary easing calendar.

Technical Analysis: Trendline resistance at $66.80 might cp bulls

The 4-hour chart shows the XAG/USD pair trading at $65.97, nearly 3.5% above the day's opening price. The rising trend line from $48.57 lows in mid-November underpins the bullish bias, offering support near $63.12.

The Moving Average Convergence Divergence (MACD) turns positive with a widening histogram, suggesting strengthening upside pressure. The Relative Strength Index (RSI) stands at 69.62, close to overbought and hinting that upside could slow.

The top of the ascending channel, in the $66.80 area, is likely to challenge bulls. Further up, the next target is the 261.8% Fibonacci extension of the October-November rally, at $68.30, and the 70.00 level.

To the downside, immediate support is at the previous all-time high, of $64.72, followed by trendline support, near $63.30, and the December 12 low, near $60.80.

(The technical analysis of this story was written with the help of an AI tool.)

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

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.

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