Silver Price Forecast: XAG/USD rises to record high above $57.50, overbought RSI may limit gains

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Silver price (XAG/USD) climbs to a fresh record high near $57.60 during the Asian trading hours on Monday. Silver has surged following the report about an outage on the Comex due to what the exchange operator CME calls a “cooling system failure.”

Silver price jumps to an all-time high around $57.60 in Monday’s Asian session.
The white metal keeps the bullish view, but the overbought RSI condition might cap its upside.
The initial support level is located near the Bollinger middle band of $51.29.

Furthermore, the prospect of a US Federal Reserve (Fed) interest rate cut in the December policy meeting could underpin the white metal in the near term. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal.

Technical Analysis:

In the daily chart, XAG/USD trades at $57.49. Price extends well above the 100-day EMA at $45.60, underscoring a firmly bullish trend. The average slopes higher, reinforcing the uptrend and offering a cushion on setbacks. RSI at 73.47 is overbought, signaling stretched momentum that could precede consolidation. Initial pullback support stands at the Bollinger middle band near $51.29.

Price sits above the upper Bollinger Band at $56.37, indicating strong bullish pressure and a stretched advance. The bands have widened, reflecting rising volatility and momentum. A daily close back below the upper band would open room toward the mid-band, while deeper losses could target the 100-day EMA at $45.60. Despite the strong trend, overbought signals suggest any upside extension could be tempered by a period of digestion before the next leg higher.

(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.