Key Moments
- XAG/USD stayed above $65.50 after touching a new record high at $66.64.
- Softer US labor data and expectations of Federal Reserve rate cuts supported precious metals.
Spot Silver Holds Near Highs as Fed Cut Bets Remain Intact
Silver (XAG/USD) traded firmly in the upper $65.00 range during Wednesday’s European session, consolidating gains after setting fresh all-time highs at $66.54 earlier in the day. The metal held above $65.50, with the latest move driven by US labor data that did little to restore confidence in the economic outlook.
On Tuesday, Nonfarm Payrolls data showed that net employment dropped by 105,000 in October, before rebounding by 64,000 in November, a gain that exceeded expectations. Despite the improvement, the unemployment rate climbed to a four-year peak of 4.6% while wage growth continued to cool.
These labor market readings left the probability of a rate cut in March largely unchanged at 42%. Market participants were turning their attention to the release of November’s US Consumer Price Index scheduled for Friday, seeking clearer guidance on the Federal Reserve’s potential timeline for monetary easing.
Technical Picture: Key Levels in Focus for XAG/USD
On the 4-hour chart, XAG/USD was last seen around $65.97, sitting nearly 3.5% above its opening level for the day. A rising trend line originating from the $48.57 lows in mid-November continued to underpin the bullish structure, providing support in the vicinity of $63.12.
The Moving Average Convergence Divergence (MACD) indicator had moved into positive territory, accompanied by a widening histogram that pointed to strengthening upside momentum. Meanwhile, the Relative Strength Index (RSI) stood at 69.62, approaching overbought conditions and signaling that the pace of gains could start to moderate.
The upper boundary of the current ascending channel, located near $66.80, appeared poised to act as an initial resistance zone for buyers. Above that, the next upside objectives were identified at the 261.8% Fibonacci extension of the October-November advance at $68.30, followed by the psychologically significant 70.00 handle.
On the downside, the first notable support sat at the prior all-time high of $64.72. Below that, trendline support emerged around $63.30, with additional backing near the December 12 low around $60.80.
| Level | Type | Price |
|---|---|---|
| 70.00 | Psychological resistance | 70.00 |
| 68.30 | Fibonacci extension (261.8% of Oct-Nov rally) | 68.30 |
| 66.80 area | Channel resistance | 66.80 |
| 66.64 / 66.54 | Record highs (intraday references) | 66.64 / 66.54 |
| 65.97 | Recent 4-hour price | 65.97 |
| 64.72 | Previous all-time high – immediate support | 64.72 |
| 63.30 | Trendline support (approximate) | 63.30 |
| 63.12 | Trendline support reference | 63.12 |
| 60.80 | December 12 low | 60.80 |
| 48.57 | Mid-November low (trend origin) | 48.57 |
(The technical analysis of this story was written with the help of an AI tool.)
Understanding Silver as an Investment Asset
Silver is widely traded among investors as a precious metal. It has long served as both a store of value and a medium of exchange. While it typically attracts less attention than Gold, investors may allocate to Silver to diversify portfolios, for its intrinsic value, or as a potential hedge during periods of elevated inflation. Exposure can be gained through physical holdings, such as coins and bars, or via vehicles like Exchange Traded Funds that track Silver’s price on global markets.
Drivers of Silver Price Movements
Silver’s price can respond to a broad set of influences. Periods of geopolitical tension or concerns about a severe economic downturn can push Silver higher due to its role as a safe-haven asset, though generally to a smaller extent than Gold. As a yieldless metal, Silver tends to benefit from lower interest rate environments.
Because Silver is priced in US dollars (XAG/USD), fluctuations in the US Dollar (USD) are also important. A stronger Dollar often weighs on Silver, while a weaker Dollar tends to support higher prices. Other determinants include investment flows, mining output – with Silver being significantly more abundant than Gold – and recycling activity.
Impact of Industrial and Jewelry Demand
Industrial usage is a significant pillar of Silver demand, particularly in electronics and solar energy, where Silver is valued for its very high electrical conductivity, surpassing that of Copper and Gold. An upswing in industrial consumption can push prices higher, whereas reduced usage can have the opposite effect.
Economic trends in major economies such as the US, China, and India can therefore drive price swings. The US and especially China have large industrial bases that utilize Silver in numerous processes, while in India, consumer demand for Silver jewelry plays a crucial role in shaping overall demand.
Relationship Between Silver and Gold
Silver prices often move in tandem with Gold. When Gold advances, Silver generally follows, reflecting their comparable roles as safe-haven assets. Investors monitor the Gold/Silver ratio – the number of ounces of Silver required to match the value of one ounce of Gold – to gauge relative value between the two metals.
A high Gold/Silver ratio is sometimes interpreted as a sign that Silver may be undervalued or that Gold may be overvalued. Conversely, a low ratio can be viewed as indicating that Gold might be undervalued relative to Silver.
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