Silver (XAG) Forecast: Geopolitical Tensions and Russian Reserves Drive Silver Market Outlook

Silver Faces Resistance as Global Central Bank Moves Support Prices

Silver prices continued to rise on Monday, though the momentum slowed after Friday’s sharp surge. The precious metal remains under pressure near a key resistance level of $34.35, a 12-year high. Traders are watching for potential downside reversals given the overbought technical conditions. A break below $30.12 would indicate a shift in trend, but most attention is focused on the 50-day moving average at $30.30, which could trigger a change in the intermediate outlook.

At 11:23 GMT, XAG/USD is trading $34.04, up $0.32 or +0.96%.

Russian Central Bank to Acquire Silver Reserves

A significant development in the silver market is the announcement from Russia’s central bank, which plans to add silver to its reserves for the first time. This decision is part of Russia’s broader strategy to increase its holdings of precious metals, which already include gold, platinum, and palladium. The move could boost silver prices in the coming months, as demand from one of the world’s largest central banks would create a new layer of support for the metal.

Historically, central banks have primarily held gold, but in recent years, Russia has diversified its reserves to include platinum and palladium, both of which it produces in large quantities. While silver is less crucial to Russia’s economy, its central bank’s decision to acquire the metal signals a potential undervaluation, especially considering its industrial applications in photovoltaics and electronics. Analysts suggest that silver’s current price may represent a buying opportunity, with some forecasting a potential 50% price increase within the next two years.

Gold’s Rally and Broader Market Impact

Gold also surged on Monday, hitting new highs due to geopolitical uncertainties, including tensions in the Middle East and speculation around U.S. election outcomes. With major central banks cutting interest rates, gold’s appeal as a safe-haven asset has been enhanced. Lower rates, combined with global risk factors, support the continued up trend of both gold and silver, as they typically move in tandem due to their status as precious metals.

China’s recent economic stimulus, alongside the Federal Reserve’s anticipated rate cuts, has further reinforced gold’s appeal, though rising U.S. Treasury yields are a limiting factor. Nevertheless, the broader environment remains favorable for both gold and silver, as economic uncertainty drives investor interest in these assets.

Short-Term Silver Market Forecast

While silver faces near-term resistance at $34.35, the fundamentals remain strong, particularly with Russia’s central bank entering the market as a buyer. The overbought technicals suggest a possible short-term pullback, especially if profit-taking emerges.

However, as long as silver holds above key levels like the 50-day moving average, the market remains bullish. Given the ongoing industrial demand and new central bank interest, silver could test higher levels by the end of the year, with upside potential if global uncertainties persist. Traders should watch for volatility, but the broader outlook suggests continued strength in the silver market.