Silver (XAG) Forecast: Traders Eye Gold Surge as Catalyst for Silver Rally

Silver Rebounds but Faces Key Resistance Levels

Silver prices rose on Tuesday as the market attempts to recover from a recent drop between $34.87 and $33.08. Silver traders are closely watching critical resistance points at $34.35, $34.87, and the significant $35.40 level, which could determine the metal’s short-term direction. While the current uptick indicates improved sentiment, downside risks remain if prices move below $33.08, potentially targeting a support pivot at $32.49.

Gold’s Influence on Silver as Prices Near Record Highs

While silver and gold are driven by many of the same fundamentals, recent movements in gold—holding close to last week’s record high of $2,758.53 per ounce—are impacting silver. Gold’s steady position within a narrow $49.77 trading range suggests consolidation, and a breakout from this range could bring additional volatility to silver. Gold’s minor pivot support at $2,733.64 and resistance at $2,758.53 are being watched, with a potential move higher in gold likely bolstering silver’s bullish outlook.

Rising Treasury Yields Challenge Precious Metals’ Appeal

Both gold and silver are affected by the rising U.S. Treasury yields, which provide a more appealing alternative to non-yielding assets. The 10-year Treasury yield rose past 4.3% on Tuesday, with investors evaluating upcoming economic data for clues on the economy’s strength. Higher yields typically weigh on precious metals, including silver, by drawing capital into fixed-income securities.

Dollar Stability Supports Silver Demand

The U.S. dollar’s stability has offered indirect support for silver, especially as it pulled back from recent highs. Dollar fluctuations can have a direct impact on silver prices, as a stronger dollar tends to weigh on commodities priced in dollars. However, recent dollar steadiness, coupled with upcoming U.S. election uncertainties and expectations of a Fed rate cut, has helped maintain silver’s appeal among investors seeking safe-haven assets.

Federal Reserve’s Rate Decision and Economic Data in Focus

Market participants are closely awaiting the Federal Reserve’s November 7 rate decision, with a 97% probability priced in for a 25-basis-point cut according to CME’s FedWatch Tool. Economic indicators due this week, such as job openings, ADP employment data, and the core PCE price index, could influence the Fed’s tone. Should data support rate cuts, this could prove favorable for silver by reducing the opportunity cost of holding non-yielding assets, further enhancing silver’s hedge potential against economic uncertainty.

Silver Market Forecast

Silver’s near-term outlook leans cautiously bullish as prices edge higher. However, resistance levels at $34.35 and $34.87 remain significant barriers. Breaking above these could set silver on course to test the critical $35.40 level. If silver fails to clear these levels, it risks a retracement toward $33.08, with the next support at $32.49 in focus. Traders should watch the dollar, Treasury yields, and economic data closely, as they will likely influence silver’s direction through year-end.