Silver Price Forecast: XAG/USD surges vertically as control of Houses passes to Democrats

• Silver rallies towards $51.85 as Democrats win control of both the House and the Senate.
• The US Dollar could remain under pressure with Democrats controlling federal legislation.
• Monetary tightening by the Fed is anticipated at its December meeting.

Safe-haven demand lifts Silver (XAG/USD) almost 4% to near $51.85 during Wednesday’s European trading session. The sharp rally in the white metal follows the United States (US) midterm election results, with Democrats securing a majority in both chambers of the federal legislature.

Safe-haven assets such as Silver have gained considerable appeal as the Democrats’ victory raises doubts about the continuation of policies pursued by US President Donald Trump’s administration, particularly support for Artificial Intelligence (AI) spending. The uncertainty is, however, expected to maintain pressure on the US Dollar (USD).

Could renewed pressure on US tech equities further weaken Dollar sentiment?

With the Dollar’s recent gains closely linked to "enthusiasm surrounding US equities and the resulting capital inflows.", Commerzbank analysts caution that the election is likely to weigh on US equities. They single out "the more tech-heavy Nasdaq in particular, are likely to come under pressure" in their assessment.

A setback in US shares could, in the analysts’ view, mean that "Dollar weakness could therefore become somewhat more entrenched over the coming hours." The risk of the currency extending its recent retreat as growth expectations are reassessed is reinforced by Commerzbank’s further observation that "if investment begins to lose momentum, markets could start pricing in a weaker phase of US growth, which would weigh on the Dollar,".

Friday’s release of US Nonfarm Payrolls (NFP) data for October will be the next major catalyst for Silver. Expectations for Federal Reserve (Fed) interest rates are likely to be significantly influenced by the figures.

A 25 basis points (bps) interest rate increase to the 4.00%-4.25% range at the December meeting is currently considered highly likely, according to the CME FedWatch tool.

Before that, investors will focus later in the day on October’s US ADP Employment Change and ISM Services PMI releases.

Silver Technical Analysis: Can Prices Recover Above the 20-Day EMA?

Below the 20-day Exponential Moving Average (EMA) of $54.83, XAG/USD retains a bearish near-term bias, trading at $51.77 on the daily chart. Continued downside pressure is indicated by the metal’s inability to regain this short-term trend reference. At 36.69, the Relative Strength Index (RSI) points to subdued momentum: it has recovered from oversold territory but has yet to show bullish conviction.

The 20-day EMA near $54.83 provides the first resistance on the upside; only a sustained move above it would soften the prevailing bearish tone. Key support lies at the 11-month low of $48.62. A breach of that level would leave scope for additional losses towards $45.

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