Silver price forecast: XAG slips toward $75.5 as rally cools after record run

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Highlights

Silver fell sharply from the $80-$82 zone as momentum traders locked in gains after record highs.
Price remains well above rising medium- and long-term averages, keeping the broader uptrend intact.
The $74-$75 area has emerged as the first key stabilization zone following the pullback.

The pullback comes after silver entered a period of extreme short-term extension, with price accelerating far above its underlying trend support during December’s rally. As momentum peaked near record highs, participation thinned and marginal buyers stepped back, leaving the market vulnerable to profit-taking. The resulting decline has been swift but measured, reflecting a recalibration of positioning rather than a shift in longer-term conviction.

Daily structure remains firmly bullish despite pullback

The daily chart reinforces that distinction. Even after the latest decline, silver continues to trade well above its rising 20, 50, 100, and 200-day EMAs, which remain stacked in a strongly bullish configuration. The 20-day average near $65.6 sits far below current price, underscoring how extended silver became during December and why a corrective phase was inevitable.

Silver price dynamics (Source: TradingView)

Importantly, none of the key moving averages have been threatened. The broader trend structure remains intact, with higher highs and higher lows preserved on the higher timeframes. The pullback has so far relieved excess without damaging the underlying trend that carried silver to historic levels.

Momentum indicators support this interpretation. Daily RSI has cooled modestly from extreme overbought readings but remains elevated in the mid-70s. This suggests momentum is being reset rather than broken. In strong trending markets, RSI often consolidates at high levels while price digests gains, and silver appears to be following that established pattern.

Momentum unwind follows blow-off move above $80

Short-term charts show that silver’s retreat was driven by exhaustion rather than panic. On the 30-minute timeframe, the parabolic advance began to fail once price could not sustain acceptance above the $80-$82 zone. A Supertrend flip and Parabolic SAR reversal quickly signaled that upside momentum had peaked, triggering a wave of profit-taking from short-term participants.

Selling accelerated as traders who entered late in the rally rushed to secure gains, pushing price rapidly toward the mid-$70s. Despite the speed of the move, the decline has remained orderly. Candles expanded in range but did not gap lower, indicating a controlled unwind rather than forced liquidation. This pattern is consistent with momentum cooling after a blow-off top, not the start of a bearish regime.

Macro shift and year-end positioning weigh on price

The macro backdrop helps explain both the rally and the pause. Silver’s retreat coincided with a brief easing in geopolitical risk after President Donald Trump said peace talks between Ukraine and Russia have made “a lot of progress,” even if a deal may still be weeks away. Any reduction in immediate geopolitical stress tends to pressure safe-haven assets in the short term.

At the same time, the pullback reflects year-end positioning. After one of the strongest annual performances in silver’s modern history, traders have moved to crystallize profits and reduce exposure ahead of the new year. That behavior has amplified volatility but does not negate the forces that drove the rally.

Those forces remain substantial. Silver is on track for an extraordinary gain of roughly 166% in 2025, fueled by tight physical supply, strong ETF inflows, central bank diversification into precious metals, and lower real yields following U.S. rate cuts. Markets are increasingly pricing in further policy easing in 2026, which continues to underpin the longer-term bullish case for non-yielding assets.

Previously discussed, silver’s surge had left the market stretched far above trend support, making a correction increasingly likely. The current pullback aligns with that expectation and represents digestion rather than distribution.

From a technical perspective, the $74-$75 zone is the first area to watch for stabilization. Holding this region would suggest consolidation is underway rather than a deeper trend change. A retracement toward $72 would still be consistent with a healthy correction. On the upside, silver would need to reclaim the $78-$80 area to signal renewed momentum.

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