Silver Price Forecast: XAG/USD Set to Climb Higher as Descending Trend-Line Breakout Unfolds
Silver (XAG/USD) continues its bullish run, building on its recent strong upward momentum. On Monday, the precious metal reached its highest level in nearly two months, continuing to post impressive gains in the European session. As of now, silver trades just below the $31.00 mark, showing an increase of around 0.70% for the day. The technical outlook suggests that this rally could extend further, and any corrective declines could provide new buying opportunities.
Recent Momentum and Breakout Above Descending Trend-Line
The recent rally in silver can be attributed to a breakout from a short-term descending trend line, which was breached last Friday. This breakout acted as a fresh catalyst for bullish traders, signaling a potential reversal in the broader trend and laying the groundwork for further gains.
In addition to the breakout, technical indicators are showing positive signs. Oscillators on the daily chart, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), are beginning to gain positive traction. This development adds further weight to the bullish outlook for silver, as it suggests that the path of least resistance for XAG/USD remains to the upside.
XAG/USD Daily Price Chart
Source: TradingView, prepared by Richard Miles
Immediate Resistance Levels to Watch
With silver climbing toward a new high, the next significant resistance level lies around the $31.45-$31.50 supply zone. This level could act as a temporary barrier, but if silver manages to break through, further upside momentum is likely. A successful move beyond this zone would open the door to reclaiming the $32.00 mark.
Above $32.00, silver would be in a strong position to challenge its one-decade high in the mid-$32.00 range, a level last touched in May. If the precious metal manages to sustain this momentum, it could signal a significant shift in market sentiment, potentially attracting even more bullish interest from traders and investors.
Support Levels and Buying Opportunities
On the downside, immediate support is seen in the $30.50-$30.45 horizontal zone. This area has the potential to cushion any meaningful corrective slide in the silver price. Furthermore, the descending trend-line, which was previously a resistance level, has now turned into a support level, currently hovering near the $30.00 psychological mark. This level could act as a key pivotal point for short-term traders and should provide a solid foundation for silver’s upward movement.
In the event of a deeper pullback, this support zone is likely to attract new buyers, viewing the dip as an opportunity to re-enter the market at favorable levels. A significant drop below $30.00, however, could lead to more aggressive selling pressure. A break below this level might expose the XAG/USD to a steeper fall toward the $29.40-$29.35 region, which is the next critical support zone.
Risk of Downside Acceleration
While the overall bias for silver remains bullish, a convincing break below the $30.00 level could change the near-term outlook. Such a move would likely trigger aggressive technical selling, potentially accelerating the decline toward the $29.00 psychological level. If the selling pressure continues, the next significant support zone lies in the $27.70 area, which represents the monthly low. Additionally, there is intermediate support near the $28.20-$28.15 region, which could also act as a temporary cushion.
If the price reaches these levels, traders may reassess the situation and consider whether the decline is a temporary correction or signals a shift toward a bearish market sentiment. However, given the current technical setup and fundamental factors supporting silver, any declines are likely to be short-lived, with buyers stepping in at key support levels.
The Broader Outlook for Silver
Several factors continue to support the bullish case for silver, beyond the recent technical breakout. Rising concerns about inflation, geopolitical tensions, and a weaker US dollar all contribute to the positive momentum for precious metals. Silver, often considered both an industrial and a safe-haven asset, benefits from these macroeconomic trends.
As inflation continues to be a key concern for global markets, precious metals like silver become more attractive as a hedge against rising prices. Moreover, silver’s role in industrial applications, particularly in renewable energy technologies such as solar panels, adds a layer of demand for the metal. This dual role allows silver to perform well both in times of economic uncertainty and during periods of industrial growth.
Furthermore, a softer US dollar boosts the appeal of silver and other commodities priced in the currency. A weaker dollar makes silver more affordable for buyers using other currencies, potentially increasing demand and pushing prices higher.
What Lies Ahead for Silver?
As silver continues its upward trajectory, traders should keep a close eye on key technical levels. The $31.45-$31.50 resistance zone is the immediate hurdle that needs to be overcome for the rally to continue. A break above this zone would confirm further upside momentum, with the next target at the $32.00 mark and potentially higher toward the mid-$32.00s.
On the downside, the $30.50-$30.45 horizontal zone and the $30.00 psychological mark are critical support levels. A dip toward these levels could be seen as a buying opportunity, but a break below $30.00 might lead to more aggressive selling and expose silver to a deeper corrective phase.
However, given the overall positive technical setup and the supportive fundamental backdrop, the outlook for silver remains bullish. Any corrective dips are likely to be short-lived, with buyers stepping in at key support levels. As long as silver remains above the $30.00 mark, the path of least resistance is to the upside, with the potential for further gains shortly.
In conclusion, silver’s recent breakout from a descending trend line, combined with positive momentum from technical indicators, suggests that XAG/USD is well-positioned for further gains. The key resistance levels around $31.45-$31.50 and $32.00 will determine the next phase of the rally, while support near $30.00 provides a strong foundation for any corrective moves. As traders monitor these key levels, the overall outlook for silver remains favorable, with the potential for the white metal to challenge its one-decade high in the weeks to come.
