Silver (XAG) Forecast: Traders Reassess Upside Targets as Gold Dominates Price Action

Gold Outperforms Silver as Ratio Signals Shift in Sentiment

Like Spot Gold, Spot Silver plunged from its record high, but the drop in silver was much more dramatic. It was down over 40% from its top while gold lost about 21% from top to bottom. Before gold and silver hit their all-time highs on January 29, the Gold/Silver ratio was trading at 43.57. When gold and silver reached bottom on Monday, the ratio was at 62.39. Today, it’s trading at 55.75.

At 13:48 GMT, XAGUSD is trading $90.86, up $5.53 or +6.48%.

Silver Dropped Twice as Hard as Gold

What this tells us is that this week gold is outperforming silver. On November 21, the ratio was at 82.86 before silver speculators took over and drove the market from $48.64 to $121.67. Gold has central bank buying support, silver doesn’t. But speculators see silver as a cheaper alternative, which is one of the main reasons for its volatility. If you know anything about volatility, it works both ways and can be particularly devastating to overleveraged traders when a market moves against them.

Both Metals Found Support at Key Levels

Silver and gold bottomed nearly the same way with both hitting their respective retracement zones and 50-day moving averages. Although silver reached a low at $71.31, the main targets were the retracement zone at $83.61 to $74.63 and the 50-day moving average target at $76.67. We consider this overshoot to be reasonable lost motion, given the volatility.

Silver’s short-term range is $121.67 to $71.31, making its retracement zone at $96.49 to $102.43 the next upside target. Gold is currently testing its retracement zone, silver has about $6.00 to go before it hits the lower end of its retracement zone. So it’s easy to see that gold has regained leadership.

Gold’s Leadership Could Cap Silver’s Rally

With gold already at its rebound target, it could begin to attract sellers. If it does begin to break down, then I don’t think silver will be able to complete its full retracement. This could lead to a quick retest of its support zone.

My point is that the volatility has been sucked out of the silver market and gold has taken over leadership. Both are likely to continue to move in the same direction but not at the same pace. So if you have plans for silver to return to $121.67, you may have to change your plans.

What Bank Forecasts Say About Silver’s Year-End Target

Using new bank forecasts for gold and the current gold/silver ratio at 55.75, we can estimate where silver may end up by year-end. With an end of the year target price for gold at $6300.00, JP Morgan may be predicting $112.96 silver. Deutsche Bank’s prediction of $5500 for gold forecasts $98.62 silver. HSBC puts gold at the end of 2026 at $4450.00, which pegs silver at $79.79 and ANZ sees gold at $4400.00, which makes $78.90 a possible target for silver.

More Information in our Economic Calendar.