Silver Price Forecasts: XAG/USD stalls below the $100.00 psychological level

Silver pulled back to levels near $98.00 from fresh record highs at 99.39
US Dollar weakness amid the EU-US tensions is underpinning demand for precious metals.
XAG/USD resistance at $100.00 might hold bulls for some time

Guillermo Alcala FXStreet

Silver (XAG/USD) hit a fresh all-time high at $99.39 earlier on Friday, before pulling back to levels around $98.25 at the time of writing. The precious metal has met resistance right ahead of the 100.00 psychological level, yet with downside attempts limited amid US Dollar's (USD) weakness.

The US Dollar Index is on track for its worst weekly performance since June, as Trump’s obsession with Greenland boosted tensions with the US's main trading partner, eroding the image of the US as a global leader as well as the status of the USD and a reserve currency.

Technical Analysis: XAG/USD remains bullish with $100.00 on sight

XAG/USD maintains its bullish tone intact with technical indicators pointing higher. The Moving Average Convergence Divergence (MACD) line stands above zero and has extended higher, suggesting strengthening bullish momentum, while the Relative Strength Index (RSI) remains at levels consistent with a firm bullish trend.

The pair found sellers at the 127.2% Fiboinacci extension of the January 8-12 rally, at the 99.50 area, which, together with the mentioned $100.00 level, is likely challenge bulls. Further up, the target is the 161.8% extension of the same range, at 106.38.

On the downside, immediate support is seen at the previous record high of $95.90, ahead of the 100-period SMA, now art $92.60, and the January 21 low, at $90.40.

(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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