Silver Price Forecast: XAG/USD consolidates below mid-$58.00s, remains close to record high

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Silver (XAG/USD) enters a bullish consolidation phase during the Asian session on Wednesday and holds steady near the all-time peak touched earlier this week. The white metal currently trades below mid-$58.00s, down 0.20% for the day, through it lacks follow-through selling.

Silver oscillates in a range as bulls pause for a breather amid the overnight daily RSI.
Friday’s breakout through the $54.40-$54.50 hurdle backs the case for further gains.
Any corrective pullback could be seen as a buying opportunity and remain cushioned.

Last Friday's sustained breakout through the $54.40-$54.50 horizontal barrier and a subsequent strong move up to a record high were seen as key triggers for the XAG/USD bulls. However, the overnight daily Relative Strength Index (RSI) acts as a headwind for the commodity and makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for an extension of the recent well-established uptrend.

In the meantime, the Asian session trough, around the $58.15 region, followed by the $58.00 mark, could protect the immediate downside. Any further corrective slide could be seen as a buying opportunity and find support near the $57.65-$57.60 region. A sustained break below, however, might prompt some technical selling and drag the XAG/USD to the $57.00 mark en route to the overnight swing low, around the $56.60-$56.55 zone.

Meanwhile, the XAG/USD bulls might now opt to wait for a move beyond the $58.85 region, or the record peak touched on Monday, before placing fresh bets. The commodity might then surpass the $59.00 round figure and build on the strong positive momentum witnessed over the past two weeks or so. The subsequent move up should allow the white metal to aim towards conquering the $60.00 psychological mark.

Silver daily chart

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.

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