Silver Price Forecast: XAG/USD drifts lower to $82.00; 38.2% Fibo. holds the key
- Silver meets with some supply and moves away from the weekly high set on Wednesday.
- The mixed technical setup warrants some caution before placing fresh directional bets.
- A sustained break through the 38.2% Fibo. will be seen as a key trigger for bullish traders.
Silver (XAG/USD) attracts some sellers during the Asian session on Thursday and reverses a major part of the previous day's gains to the $86.30 area, or the weekly high. The white metal currently trades just below mid-$82.00s, down over 2.5% for the day, though it remains confined in a familiar range held since the beginning of this week.
From a technical perspective, the overnight failure near the 38.2% Fibonacci retracement level of the recent downfall from the all-time peak and the subsequent fall warrants some caution for the XAG/USD bulls. Moreover, the Moving Average Convergence Divergence (MACD) line stands above the Signal line and above zero, though the spread narrows as the histogram contracts, hinting at fading upside momentum. The Relative Strength Index sits at 50.89 (neutral), consistent with a consolidative tone.
Meanwhile, the 200-period Simple Moving Average (SMA) on the 4-hour chart trends higher at $87.42. The XAG/USD, however, holds beneath it, keeping rebounds capped. The 38.2% retracement at $85.87 acts as initial resistance, and a clear break would open the 50% retracement at $92.59. Failure to clear resistance could drag theXAG/USD back toward the 23.6% retracement at $77.56. A sustained move above the 200-period SMA would be needed to improve the broader setup.
(The technical analysis of this story was written with the help of an AI tool.)
XAG/USD 4-hour chart
Silver FAQs
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.
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.
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.
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.