Silver (XAG) Forecast: Price Prediction Hinges on 50-Day MA Breakout Strength

Silver Edges Higher but the Move Lacks Conviction

Spot Silver (XAGUSD) is trading at $79.62 early Friday, up $1.19 or 1.52% at 09:12 GMT. Short-term buying picked up but the broader macro picture isn’t backing it up. This looks more like a bounce than a breakout.

The U.S. Dollar Index is stabilizing after weakening earlier in the week and that’s already capping the move. The 10-Year U.S. Treasury yield is holding firm. Markets are pricing just a 27% chance of a Federal Reserve rate cut in December. Before the Iran war that number pointed to multiple cuts this year. I keep coming back to that shift when I try to figure out why silver can’t get traction. The dollar stopped falling and the rate outlook turned against it at the same time.

The geopolitical bid is coming out too. The Israel-Lebanon ceasefire and U.S.-Iran talks knocked safe-haven demand down. Oil pulled back on the peace optimism and lower oil takes inflation pressure off the table. Inflation was one of the main reasons traders were buying silver earlier this year. That argument is getting smaller by the day.

The earlier bullish drivers are priced in. Traders are sitting on their hands waiting for something new. A weaker dollar, falling yields or a flare-up in geopolitical risk would change the picture fast. Right now none of those are developing and silver knows it.

Technical Outlook

Technically, the trend is up according to the 200-day moving average at $60.87 and the 50-day moving average at $78.91.

Earlier in the week, traders pierced the 50-day moving average, even closing above it on April 15, but there was no breakout to the upside. That’s because of low ETF buying below average volume and volatility. Under normal trading conditions, that move should have paid off, in my opinion.

As it stands, my work indicates the near-term direction is being controlled by the 50-day moving average. A sustained move over this indicator will signal the presence of buyers. If this creates enough upside momentum, we could see a surge into a long-term pivot at $82.61. This price is both resistance and a potential trigger point for an acceleration to the upside. But what will be the catalyst to drive it higher?

On the flip-side, a sustained move under the 50-day moving average will signal the presence of sellers. This could lead to a quick plunge into the long-term 61.8% level at $74.63. If this fails, look for the break to continue into a minor support base at $71.01 to $68.65. Buy the dip kind of traders are likely to re-emerge on a test of this area.

More Information in our Economic Calendar.