Silver price forecast: XAG/USD at crossroads amid mixed trading
Silver price tests $31.50 resistance amid strategic accumulation and short position concerns
Silver price is undergoing a critical phase in its price performance, with multiple factors pushing the metal toward new price levels.
Since late November, silver has demonstrated a consistent uptrend, marked by a series of swing highs and lows which has traded above the 200 EMA. However, silver has recently encountered significant resistance at $31.50, a level that has acted as a ceiling since November. Despite this, the metal has remained firmly positioned above $30.80, suggesting a consolidation phase before the next potential move.
Silver price dynamics (November-December 2024). Source: TradingView.
The broader picture surrounding silver's price movement points to the increasing strategic value of the metal. Russia, China, and India have been accumulating silver in significant quantities, signaling a shift in the global market’s perception of silver. This growing accumulation, coupled with the ongoing short positions held by Western commercial banks (estimated at 4-6 billion ounces), suggests that the price of silver is being artificially suppressed, despite mounting demand. As such, the manipulation of silver prices, primarily driven by short-selling and underestimation of the metal’s broader uses, is becoming harder to ignore.
Technical setup points to potential breakout for silver forecast
From a technical perspective, silver is at a critical juncture. After reaching the resistance level at $31.50, the price has consolidated in a tight range above $30.80. Recent price action in the European session saw silver rise to $31.25, bolstered by support from both the 200 EMA and a bullish trendline. This setup could lead to a decisive break, with the potential for a surge if the $31.50 resistance is cleared, or a decline if silver falls below the trendline.
In summary, the factors aligning in silver’s favour, strategic accumulation, a historically high short position, and growing demand, coupled with its technical setup, point to a future price breakout.
Silver price struggles to break $31.50 as traders await US jobs reports. Strong jobs report to signal a shift in favor of the US dollar, putting pressure on the metal.
