Silver Retreats from Peak, But Technical Foundation Remains Solid

White metal XAG/USD experienced a pullback during Asian trading Thursday, slipping to the $65.70-$65.75 zone with losses exceeding 1% on the session. Despite the short-term decline, Silver remains positioned near its recently established all-time high, and the broader technical picture continues to support further upside for investors and traders.

Technical Setup Favors the Bulls

The breakthrough past the $64.00 resistance level overnight served as a critical inflection point for bullish participants. This barrier now aligns with the 100-hour Simple Moving Average (SMA), which functions as both a dynamic support zone and a reference point for short-term positioning decisions. The upward trajectory of this moving average suggests dips toward this level may attract buying interest rather than signal capitulation.

On the momentum front, the Relative Strength Index (RSI) is trading at 59.95 on the hourly timeframe—neither overbought nor oversold, maintaining a neutral-to-bullish lean. However, daily chart readings show overbought conditions warrant caution. The Moving Average Convergence Divergence (MACD) recently crossed into negative territory, indicating momentum has cooled from its prior strength. Despite this, the overall environment remains constructive for higher prices.

What Keeps Silver in Demand?

Silver’s appeal extends beyond just technical trading. As a precious metal with dual characteristics—store of value and industrial commodity—it attracts different buyer categories. During periods of economic uncertainty or rising inflation, investors seek safe-haven assets, though Silver’s appeal typically trails Gold in crisis scenarios.

The relationship between the Dollar and XAG/USD cannot be overlooked. Since Silver is dollar-denominated, currency strength directly impacts competitiveness on international markets. A weakening Dollar typically lifts prices, while Dollar strength acts as a headwind. Additionally, Silver’s industrial demand from electronics and solar sectors—sectors requiring its superior electrical conductivity—adds a production component to price movements. Emerging market consumption patterns, particularly in China and India, further shape the supply-demand balance.

The Gold/Silver ratio remains a useful valuation tool. When this ratio compresses, it suggests Silver is gaining relative value against Gold. Some market participants use extreme readings to identify potential mispricings between the two metals.

Key Levels for Traders

To maintain the bullish structure, Silver must hold above the 100-hour SMA support. A decisive breach below this level could trigger a deeper pullback. Confirmation of sustained strength would require the MACD to return to positive territory and RSI to remain above the 50 midpoint. These conditions would reinforce conviction among bulls and potentially attract fresh buying momentum toward previous resistance levels.