Key Moments
- Silver advances for a second consecutive session, reaching a one-week high ahead of the European open.
- Breaks above the $78.00 horizontal barrier and the 100-hour SMA, reinforcing a bullish technical outlook.
- RSI at 71.20 signals overbought conditions, while potential support is seen near $78.00, $76.33, and the 100-hour SMA at $74.45.
Momentum Builds as Silver Extends Two-Day Advance
Silver (XAG/USD) continues to push higher on Tuesday, extending the prior session’s gains and attracting notable follow-through buying for a second straight day. The latest advance carries the price to a one-week peak ahead of the European session, with buyers aiming to sustain the move above the psychologically important $79.00 mark.
Technical Signals Favor Bulls Despite Overbought Readings
The return above the 100-hour Simple Moving Average (SMA) overnight, combined with an intraday break through the $78.00 horizontal resistance on Tuesday, serves as a key bullish catalyst for XAG/USD. From a momentum standpoint, the Moving Average Convergence Divergence (MACD) line is positioned above its Signal line and remains in positive territory, while a widening histogram points to strengthening upside momentum.
At the same time, the Relative Strength Index (RSI) (14) stands at 71.20, indicating overbought conditions that could restrict immediate upside as shorter-term dynamics become stretched. Nonetheless, the upward-sloping 100-hour SMA keeps the near-term bias pointed higher, suggesting that pullbacks are likely to remain limited while prices hold above this moving average.
What a wild year for $SILVER ! I was expecting a good run. But this is pretty wild !
Currently we're in a classic cup and handle structure Once we're holding above $79-80.50 it looks like we could see a strong continuation of the run up we just saw.… pic.twitter.com/J8mEyxmCk4
— Phi-Blue (@Pheonixisblue) January 6, 2026
Key Levels to Watch: Support and Overbought Relief Zones
Ongoing positive MACD momentum and the expanding histogram backdrop support the prospect of further gains in the current uptrend. However, the RSI reading above 70 warns that the rally is extended in the near term. A retreat toward the day’s opening level at $76.33 could help alleviate overbought pressures and maintain a more sustainable bullish configuration.
Below that, the 100-hour SMA, currently located at $74.45, is expected to offer additional dynamic support. On the upside, the former resistance at $78.00 now acts as an initial support zone on any corrective move, following its breakout as a horizontal hurdle.
| Technical Indicator / Level | Current Status / Value | Implication |
|---|---|---|
| Price action | One-week high, targeting beyond $79.00 | Confirms short-term bullish momentum |
| 100-hour SMA | $74.45 | Dynamic support; bias remains bullish above this level |
| Horizontal level | $78.00 | Recent breakout zone, now potential support on pullbacks |
| Day open | $76.33 | Possible pullback target to ease overbought conditions |
| RSI (14) | 71.20 | Overbought; may limit near-term upside |
| MACD | Line above Signal, positive territory, widening histogram | Supports continuation of bullish momentum |
(The technical analysis of this story was written with the help of an AI tool)
XAG/USD 1-hour Chart
XAG/USD 1-hour chart
Silver Market Overview and Common Questions
Why Investors Look to Silver
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Key Drivers of Silver Prices
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Impact of Industrial Demand
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Relationship Between Silver and Gold
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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