Silver Price Forecast: XAG/USD consolidates gains, momentum favors bulls above $41.00
- Silver extends rally to a fresh 14-year high near $41.67 before easing towards $41.00.
- Friday’s weaker-than-expected US NFP data has made a September Fed rate cut almost certain, boosting demand for precious metals.
- CFTC CoT report shows speculators adding to Silver longs, commercials remain heavily short.
Silver (XAG/USD) extended its gains for a second consecutive day on Monday, briefly touching a fresh 14-year high at $41.67 before easing slightly. At the time of writing, XAG/USD is trading around $41.25, up nearly 0570% on the day, underpinned by a broadly weaker US Dollar (USD) and softer US Treasury yields.
Last week’s dismal Nonfarm Payrolls (NFP) report confirmed a cooling labor market, cementing expectations that the Federal Reserve will cut interest rates at its September 16-17 monetary policy meeting. The prospect of lower borrowing costs reduces the opportunity cost of holding non-yielding assets like Silver, providing an additional tailwind.
Positioning and sentiment backdrop
The latest CFTC Commitments of Traders (CoT) report for the week ending September 2, 2025, showed speculators significantly added to their long exposure in Silver futures. Non-commercial longs rose by more than 6,000 contracts, while shorts declined, underscoring growing investor conviction in the bullish trend. However, commercial hedgers remain heavily net short, suggesting profit-taking or resistance could emerge around major chart levels.
Meanwhile, the Gold/Silver ratio is trading near 88.00, holding just above its 21-day Simple Moving Average (SMA). The ratio has been trending lower since April, reflecting Silver’s relative outperformance versus Gold. The ratio remains elevated compared to its historical average but is well off its pandemic-era highs. This relative valuation gap, combined with Silver's dual role as a monetary metal and an increasingly vital industrial component in sectors like solar and electric vehicles, suggests that XAGUSD has strong technical and fundamental tailwinds.
Technical outlook
On the daily chart, Silver is consolidating above $41.00 after breaking through the key $40.50 resistance zone last week. The metal is trading well above its 21-day SMA at $39.10, with the Relative Strength Index (RSI) hovering near 71, signaling overbought conditions but also reflecting strong upward momentum. The Average Directional Index (ADX) at 23 confirms that trend strength is building. A decisive daily close above the $41.50 handle would pave the way toward the $42.00 barrier, with scope for an extended move to $43.40, the high from September 2011. On the downside, initial support is seen at $41.00, followed by $39.50, and then the 21-day SMA at $39.10.
On the 4-hour chart, XAG/USD is consolidating after posting a fresh multi-year high, with rising 21- and 50-period moving averages ($40.97 and $40.37) providing dynamic support. Momentum remains constructive, as the RSI at 62 leaves room for further upside, while the Moving Average Convergence Divergence (MACD) is in the early stages of a bullish crossover, with the histogram just beginning to turn positive. This signals that upward momentum is gradually building, keeping the near-term bias tilted in favor of the bulls as long as price holds above $41.00.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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