Silver Price Forecast: XAG/USD rallies past $47.50 amid US Dollar’s weakness

Technical Analysis: The multi-year high at $48.03 is drawing closer

The pair’s corrective pullback found support right below $46.00 on Thursday and is trading higher, at least for now. The 4-hour RSI has returned below the overbought area and, although the daily chart keeps showing signs that the rally is overextended, right now there is room for further appreciation.

Immediate resistance is at the mentioned $48.00 area, which capped bulls on Wednesday and Thursday. Beyond here, the top pf the near-term bullish channel is around $48.65. The 161.8% extension of the September 17-23 bullish run, at $49.15, further down, the next targets are at $45.30 (September 25 high) and $44.50 (September 23 high).

To the downside, immediate support area is at the area between the bottom of the mentioned channel, now at $46.15 and the September 30 and October 2 lows, around $45.95 from current levels might find support at the $45.96 intraday lows ahead of the previous long-term highs, at $45.30 (September 25 high) and $44.45 (September 23 high).

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.