Silver Price Forecast: XAG/USD oscillates around $78.00; downside seems limited

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Silver (XAG/USD) seesaws between tepid gains/minor losses through the Asian session on Thursday and now trades around the $78.00 mark, down 0.40% for the day. The white metal, however, holds above the previous day's swing low and a month-to-date ascending trend-line support, near the $77.00 mark.

Silver struggles for a firm intraday direction during the Asian session on Thursday.
The technical setup backs the case for the emergence of dip-buying at lower levels.
A break below 100-hour SMA/ascending trend line would negate the positive bias.

This is followed by the rising 100-hour Simple Moving Average (SMA), around the $75.65 region, which should act as a key pivotal point for short-term traders. While the XAG/USD holds above the said support levels, the near-term bias seems tilted in favor of bullish traders and backs the case for the emergence of dip-buying.

The Moving Average Convergence Divergence (MACD) moves toward the zero line from negative territory, suggesting that the momentum is stabilizing after the latest retracement. The Relative Strength Index (RSI) sits at 47 (neutral), reflecting balanced conditions. Moreover, a sustained trade above the said confluence validates the positive bias.

A convincing break below, however, might prompt some technical selling and make the XAG/USD vulnerable to accelerate the fall further towards the $75.00 psychological mark. The corrective decline could extend further towards the next relevant support near mid-$74.00s, which is likely to act as a near-term base for the commodity.

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

XAG/USD 1-hour 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.