Silver (XAG) Forecast: Will Geopolitical Risks and Higher Gold Prices Drive Silver to $32.28?

How Did Silver Manage to Defy a Strong Dollar and High Yields?

Silver prices climbed last week, closing at $31.35, up 3.61%—a notable rise given the challenges posed by a strong U.S. dollar and elevated Treasury yields. The dollar reached a 13-month high, traditionally a headwind for silver by making it more expensive for international buyers. Similarly, higher benchmark 10-year yields typically reduce silver’s appeal as a non-yielding asset. However, the metal’s strength defied these pressures, driven by unique market factors.

What Boosted Safe-Haven Demand for Silver?

Heightened geopolitical tensions were a key driver of silver’s resilience. The Russia-Ukraine conflict intensified last week, with significant military escalations drawing investor interest toward safe-haven assets. This demand for protection elevated both gold and silver prices, with gold’s strength providing an additional tailwind for its sister metal.

Meanwhile, macroeconomic uncertainty contributed to silver’s gains. Although the likelihood of a December Federal Reserve rate cut eased slightly, traders still speculate on monetary easing in 2024. Mixed U.S. economic data—highlighting strong labor performance but weak manufacturing—added to the uncertain backdrop, enhancing silver’s appeal as a hedge.

What Are the Key Technical Levels Traders Should Watch?

Silver’s ability to sustain its rally now depends on the critical weekly pivot at $30.44. Holding above this level signals strong buyer momentum, positioning the metal for a test of the next resistance at $32.275. If this level is breached, the market could set its sights on the long-term high of $34.87.

Conversely, a decline below $30.44 could indicate renewed selling pressure. Key support at $29.68 may come into play, and a break below this level could accelerate declines toward $26.47. These levels are pivotal for traders assessing silver’s strength in the current environment.

What Will Drive Silver’s Performance This Week?

Silver’s performance will depend on several factors in the coming week. Continued geopolitical risks could sustain safe-haven demand, supporting prices above $30.44. On the other hand, any resurgence of the dollar’s strength or rising yields may cap gains.

Additionally, Federal Reserve commentary and critical U.S. economic releases, such as consumer confidence and housing data, will play a significant role. Market participants will be watching for any indications that monetary policy may shift sooner than expected, as this could influence silver’s direction.

Is Silver Positioned for Continued Strength?

Silver’s rally last week was a testament to its appeal in uncertain times. Traders should monitor $30.44 closely as the key to near-term momentum, with $32.275 as the next target. While risks from a strong dollar and high yields remain, safe-haven demand and macroeconomic uncertainty may continue to provide support.