Silver (XAG) Forecast: Silver Bounces as Yields, Dollar and Crude Back Off

Silver Bounced After Yields, Dollar, and Crude All Backed Off Together

Spot Silver is trading higher Friday after buyers stepped in near the same prices tested on the September 16 Fed decision. Thursday’s selling was not a silver-specific event. Rising crude pushed the inflation argument back into the market. Treasury yields moved higher. The dollar followed. Silver and gold both broke under pressure because the rate trade was getting bigger across the board.

Friday is the other side of that trade. Crude is lower. Yields are easing. The dollar is backing off. That combination brought buyers back into silver at the same area where they showed up after the September 16 rate decision. The bids are in the same place they were two weeks ago.

At 08:45 GMT, Spot Silver is trading $64.68, up $0.82 or 1.29%. The session high is $64.72 and the low is $63.36.

Daily Spot Silver (XAGUSD) Technical Analysis

The main trend is down according to the daily swing chart. A trade through the main top at $67.55 will change the main trend to up. A move through the recent bottom at $62.31 will signal a resumption of the downtrend. A new minor bottom has formed at $63.07.

Silver is trading above its 50-day moving average at $63.78 after breaking it on Thursday then recovering it on Friday. The average and the $62.98 support level form the first support cluster. Thursday’s low at $63.07 stopped above the lower boundary of that cluster before buyers came in.

The retracement zone at $62.98 to $61.04 will be the area to watch if the 50-day moving average fails. A sustained break through $62.98 would put the 61.8% level at $61.04 in play. Below that, the 50% level of the all-time-high range at $60.84 becomes the next major downside target.

On the upside, silver has resistance at $65.32, followed by $66.75 and the $67.55 main top. A trade through $67.55 will change the main trend to up and put $67.79 in play.

Silver Found Buyers at the September 16 Level Again

Spot Silver reached $63.07 Thursday before turning higher. That put the market back into the area where traders sold the Fed decision before buyers showed up on September 16. The repeat test matters. Two visits to the same price area in two weeks and buyers responded both times.

The metal did not need a new headline to bounce. It needed the dollar, yields, and crude to stop pressing. All three turned lower heading into Friday and silver followed gold off the lows. The recovery shows buyers were willing to take offers near $63. Whether they are willing to take offers above $65 is a different question and Friday has not answered it yet.

Gold is following the same pattern. Both metals are recovering as the dollar and yields ease. Both remain below the levels lost during Thursday’s break. The rate market is still the first screen for silver and gold. Thursday proved it on the way down. Friday is proving it on the way back up.

Crude Backed Off but the Inflation Risk Has Not Left

November WTI crude oil futures are lower Friday after Thursday’s rally. The market may have removed some immediate supply premium after the Hormuz-talks headline earlier in the week. Shipping conditions have not normalized. Tanker flows have not returned to normal. The Strait is still the variable that can reverse crude on one headline.

Thursday showed what happens to silver when crude rallies into a rate market that is already elevated. The 10-year pushed near 5.15%. The 30-year reached 5.446%. Silver sold off alongside gold as the entire metals complex gave ground to higher yields. Friday’s lower crude is giving silver room. It is one session of relief after a week of pressure from the energy side.

The dollar is easing alongside crude Friday. A softer dollar gives overseas buyers a better entry point. The broader rate outlook still favors the greenback with Treasury yields holding near levels last seen in 2004 and 2007. Friday’s move has to hold through the New York session before traders can call it more than overnight positioning.

What to Watch

Silver is recovering because the three markets that pressured it Thursday are all easing at the same time Friday morning. The 50-day at $63.78 and the $62.98 support level are where buyers showed up. Thursday’s low at $63.07 held above the cluster both times the market tested this area.

The rate trade is still running the metals. The 10-year is off Thursday’s high but is holding well above 5%. The dollar backed off its recovery high but remains above the 50-day. Crude is lower Friday but the Hormuz story can reverse it on one headline out of the UNGA sessions. Silver got a bounce because all three eased together. The test is whether any of them stay lower through the New York session or turn back higher and take the recovery away.

More Information in our Economic Calendar.