Silver Price Forecast: XAG/USD hits one-month high, eyes $62.00 after technical breakout
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.
Silver prices surged to a one-month high of $62.00, breaking through a key technical level during early European trading hours on Wednesday. The metal achieved this milestone after a breakout from the 200-period Simple Moving Average (SMA) in the 4-hour chart and a two-week-old trading range hurdle near the $60.00 mark. Analysts believe that the Relative Strength Index (RSI) of 73.53, indicating overbought conditions, and the positive Moving Average Convergence Divergence (MACD) signal further support the bullish momentum in XAG/USD.
However, the next hurdle lies at the 23.6% Fibonacci retracement level of the May-July decline at $62.92. A sustained break above this level could expose higher Fibonacci resistance zones at $67.98 and $72.08. Conversely, initial support for the metal is forecasted near the $59.04 level of the 200-period SMA. The technical outlook suggests that the prevailing sentiment is favoring an upward trend, driven by optimism surrounding a potential US-Iran deal, which is expected to negatively impact the US Dollar (USD).
Consequently, any impending correction might be greeted with buying interest as the Federal Reserve (Fed) rate hikes are expected to recede, benefiting non-yielding commodities such as Silver. Silver, a precious metal predominantly used as a store of value and medium of exchange, can be traded through various means, including physical possession or via Exchange Traded Funds tracking its price on international markets.
Several factors influence Silver prices, such as geopolitical events, interest rates, the US Dollar's performance, investment demand, mining supply, and recycling rates. Silver's industrial applications, particularly in electronics, solar energy, and consumer demand for jewelry, especially in India, also contribute to its price fluctuations.
The Gold/Silver ratio, serving as a gauge of relative valuation between the two metals, could provide insights into potential price movements.
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