Silver Price Forecast: XAG/USD rebounds, but bearish technical outlook persists

Silver prices rebounded on Thursday, climbing nearly 2.54% to trade around $57.05, following a sharp drop the previous day. This recovery occurred as worries surrounding AI-related investments impacted global equities, prompting investors to move towards government bonds, leading to a decline in US Treasury yields and a decrease in the value of the US Dollar (USD).

Currently, traders predict that the Federal Reserve will maintain interest rates steady at its upcoming October 27-28 meeting, with a 90% chance of a rate hike by December. The XAG/USD price trades below several key moving averages, such as the 50-day, 100-day, and 200-day Simple Moving Averages, indicating a bearish technical outlook.

However, the Relative Strength Index (RSI) suggests that the metal is nearing oversold territory, which may present buying opportunities. Based on Fibonacci retracement levels, initial resistance can be found at the 23.6% retracement at $58.27 and higher levels at the 38.2% ($60.04) and 50.0% ($61.47) retracements, with significant support at the 61.8% retracement around $62.91.

If the price breaks below $55.00, it may trigger further declines towards the $50 level. Silver serves as an attractive alternative investment for those looking to diversify their portfolio, particularly during high-inflation periods, owing to its intrinsic value and relatively lower price volatility compared to gold.