Silver Price Forecasts: XAG/USD rises beyond $87.00 after a two-day selloff

Silver reaches levels beyond $87.00 after bouncing from one-month lows below $72.00
Precious metals are bouncing up on Tuesday, amid an improved market mood.
XAG/USD’s bulls are likely to be challenged at the $88.00-$90.00 area.

Guillermo Alcala FXStreet

Silver (XAG/USD) shows moderate gains on Tuesday, trading at $87.05 at the time of writing. The white metal found some footing after plummeting more than 30% in the previous two trading days, hitting one-month lows right below the $72.00 line.

Contrary to their usual behaviour, precious metals are recovering on Tuesday amid a brighter market sentiment. A trade deal between the US and India and news about upcoming nuclear talks with Iran have improved investors' mood and are boosting demand for risky assets.

Technical Analysis: XAG/USD immediate resistance is at $88.00

XAG/USD has trimmed some losses, but technical indicators are still at levels highlighting a bearish momentum. The Moving Average Convergence Divergence (MACD) remains below the Signal line and the zero mark, while the negative histogram contracts toward zero. The Relative Strength Index (RSI) edges higher, hinting at ∑ unwinding negative pressure, but remains below the key 50 level.

On the upside, the pair is likely to meet resistance at Monday's highs, in the $88.00 area. A confirmation beyond here would shift the focus towards the $100.00 round level and the intra-day resistance in the $104.00 area.

Support levels are at the $71.37 monthly low and below here, the early December highs, and mid-December lows in the $60.00 area.

(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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