Silver Price Forecast: XAG/USD hits one-month high, eyes $62.00 after technical breakout

Silver gains strong positive traction for the second straight day and seems poised to climb further.
An intraday breakout above the 200-SMA on H4 and a two-week-old range favor bullish traders.
The RSI is flashing overbought conditions, though might do little to hinder the strong move up.

Haresh Menghani FXStreet

Silver (XAG/USD) builds on the previous day's modest gains and attracts strong follow-through buying for the second straight day on Wednesday. The positive momentum lifts the white metal to the $62.00 neighborhood – the highest level since July 7 – during the early European session.

An intraday breakout through the 200-period Simple Moving Average (SMA) on the 4-hour and a two-week-old trading range hurdle near the $60.00 psychological mark were seen as key triggers for the XAG/USD bulls. Meanwhile, the Relative Strength Index (RSI) at 73.53 signals overbought conditions, while the Moving Average Convergence Divergence (MACD) remains positive, suggesting that the upside momentum remains strong.

Hence, any subsequent move up beyond the $62.00 mark is likely to confront a hurdle near the 23.6% Fibonacci retracement level of the May-July decline at $62.92. A sustained break there would expose higher Fibo. barriers at $67.98 and $72.08. On the flip side, initial support is pegged near the 200-period SMA at $59.04, ahead of the Fibonacci anchor near $54.73, where buyers could re-emerge on a more pronounced pullback.

Nevertheless, the constructive technical setup suggests that the path of least resistance for the XAG/USD is to the upside as the latest optimism over a potential US-Iran deal continues to undermine the US Dollar (USD). Hence, any corrective slide could be bought into and remain cushioned amid receding US Federal Reserve (Fed) rate hike bets, which tend to benefit non-yielding commodities, including Silver.

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

XAG/USD 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.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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