Silver Price Forecast: XAG/USD refreshes record high, looks to build on move beyond $61.00

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Silver (XAG/USD) enters a bullish consolidation phase during the Asian session and oscillates in a narrow range near the all-time peak, around the $61.00 neighborhood, touched this Wednesday.

Silver builds on the overnight strong gains and touches a fresh all-time high on Wednesday.
The constructive technical setup favors bullish traders and backs the case for further gains.
Any meaningful corrective slide could be seen as a buying opportunity and remain limited.

Silver (XAG/USD) enters a bullish consolidation phase during the Asian session and oscillates in a narrow range near the all-time peak, around the $61.00 neighborhood, touched this Wednesday. Meanwhile, the broader technical setup suggests that the path of least resistance for the white metal remains to the upside.

The overnight breakout through the monthly trading range hurdle, around the $58.80-$58.85 region, was seen as a fresh trigger for the XAG/USD bulls. However, the Relative Strength Index (RSI) is flashing overbought conditions on 4-hour/daily charts, which, in turn, is holding back traders from placing fresh bullish bets. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for a further appreciating move.

Meanwhile, any corrective slide below the $60.30-$60.20 immediate support could attract fresh buyers and find decent support near the $60.00 psychological mark. A convincing break below the said handle, however, might prompt some long-unwinding and drag the XAG/USD towards the trading range resistance breakpoint, around the $58.80-$58.85 region. The latter should act as a key pivotal point, which, if broken, could pave the way for further losses.

On the flip side, momentum above the $61.00 mark will reaffirm the near-term constructive outlook and set the stage for an extension of the XAG/USD's recent strong move up from the vicinity of mid-$45.00s, or late October swing low.

Silver 4-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.