XAG/USD: Price Analysis. Forecast. Improved Risk Sentiment May Curb Silver's Growth

[Ben Graham]

On Thursday, silver continued its recovery for the third consecutive day, trading near the round $49.00 level.

The latest surge seems more driven by technical factors than by new fundamentals, as improved risk sentiment stemming from the US-China trade truce has effectively reduced demand for precious metals as safe-haven assets.

However, markets received a slight boost from the Federal Reserve's decision to lower interest rates on Wednesday. Nonetheless, the potential for further growth remains limited: most market participants perceived this as a "hawkish" cut following Fed Chair Jerome Powell's comments, stating that "a further rate cut in December is not predetermined," emphasizing that the prospects for future policy remain uncertain.

From a technical perspective, the rebound from the 50-day exponential moving average this week and the subsequent upward movement favor the bulls in XAG/USD. However, the relative strength index (RSI) on the daily chart has just started to gain momentum, warranting caution before confirming that the recent corrective decline from this month's historical high has concluded. The immediate resistance level lies in the $49.00–$49.45 zone, where the 21-day simple moving average (SMA) is located. A decisive close above this area would enable the white metal to target the psychological level of $50.00, and buying above this point would strengthen the case for a resumption of the upward trend.

The RSI has rebounded to 53 after briefly falling below the neutral figure of 50, indicating a waning of bearish momentum and that buyers have begun to regain control of the situation.

On the downside, initial support is found at Thursday's low of $47.20 and the round level of $47.00, followed by $46.00 and the October 28 low of $45.56, which closely aligns with the 50-day EMA. A breakout below this zone risks continuing the corrective pullback to the next key area of $44.50–$43.00.

The material has been provided by InstaForex Company - www.instaforex.com