• Silver surges past $32.00, driven by falling US Treasury yields, with prices up 2.26% during the North American session.
• The RSI indicates growing bullish momentum, with key resistance levels at $32.95 and $33.00 in sight.
• A pullback below $32.00 could see support at $31.32, with stronger backing around the 50-DMA at $30.13.

Silver’s price skyrocketed during the North American session, sponsored by falling US Treasury bond yields. Even though traders trimmed bets that the Federal Reserve would ease policy less aggressively than expected, precious metals extended their gains. The XAG/USD trades at $32.33, up over 2.26%.

XAG/USD Price Forecast: Technical outlook

Silver’s price uptrend remains intact, at the brisk of registering a yearly record high. Earlier in the session, XAG/USD cleared the $32.00 psychological barrier and has extended its gains past the $32.50 area.

The Relative Strength Index (RSI) is bullish, aiming higher, indicating buyers are gathering steam.

 Given the backdrop, the XAG/USD key resistance levels would be the year-to-date (YTD) high at $32.95, followed by the $33.00 mark. Once it is exceeded, the next stop would be October 1, 2012, peaking at $35.40.

Conversely, if XAG/USD retreats below $32.00, the first support would be the October 17 swing low of $31.32, followed by the confluence of the October 8 low and the 50-day moving average (DMA) at $30.13

XAG/USD Price Action – Daily Chart

• Silver regains positive traction on Friday and climbs to a nearly two-week top.
• The technical setup favors bulls and supports prospects for additional gains.
• Move beyond $32.20-$32.25 is needed to validate the near-term positive bias.

Silver (XAG/USD) regains positive traction following the previous day’s good two-way price moves and climbs to a two-week top during the first half of the European session on Friday. The white metal, however, continues with its struggle to capitalize on the move beyond the $32.00 round figure, warranting some caution for bullish traders. 

Looking at the broader picture, the recent bounce from the vicinity of the $30.00 psychological mark and the subsequent move up supports prospects for a further near-term appreciating move. The constructive outlook is reinforced by the fact that oscillators on the daily chart have been gaining positive traction and are still away from being in the overbought zone. 

That said, it will still be prudent to wait for some follow-through buying beyond the $32.20-$32.25 hurdle before placing fresh bullish bets. The XAG/USD might then climb to its highest level since December 2012 touched earlier this month and make a fresh attempt to conquer the $33.00 mark. A sustained strength beyond the latter will be seen as a fresh trigger for bulls. 

On the flip side, the $31.65 horizontal zone now seems to protect the immediate downside ahead of the overnight swing low, around the $31.30 region. Any further decline could be seen as a buying opportunity and remain limited near the $31.00 mark. A convincing break below the said handle, however, might prompt some technical selling and make the XAG/USD vulnerable. 

The downward trajectory might then drag the white metal below the $30.75 support zone, back towards last week’s swing low, around the $30.15-$30.10 region. The said area now coincides with the 50-day Simple Moving Average (SMA) and is closely followed by the $30.00 mark, which if broken decisively will shift the near-term bias in favor of bearish traders.

Silver daily chart

• Gold price sits at record highs above $2,700, awaits Fedspeak for fresh impetus.
• The US Dollar consolidates weekly gains after riding on a likely Trump victory optimism.
• The daily RSI prods overbought territory but Gold buyers are not ready to give up yet.

Gold price is sitting at the highest level on record above $2,70o early Friday, with the latest uptick led by China’s stimulus optimism and a broad-based US Dollar (USD) pullback. The focus now shifts to the Middle East geopolitical updates and Fedspeak for further trading impetus.  

Gold price eyes Mideast tensions, Fedspeak

The USD retreats from over two-month highs against its six major rivals in Asian trades on Friday, as buyers take a breather after the recent rally back by the market’s optimism that Republican nominee Donald Trump is set to win the 2024 US presidential elections. Trump’s fiscal and trade policies are seen as inflationary and positive for the Greenback.

Besides, markets witness a positive shift in risk sentiment, as the mixed Chinese growth and activity data combined with the People’s Bank of China’s statement have rekindled stimulus hopes. The renewed market optimism also diminishes the Greenback’s appeal as a safe-haven currency.

Therefore, Gold price receives a double booster shot, first from a broad USD retracement and then from expectations of further interest-rate cuts from China. Chinese central bank Governor Pan Gongsheng said that “depending on market liquidity, reserve requirement ratio (RRR) could be further reduced by 0.25 to 0.5 percentage points before the end of the year.”

He noted that “the interest rate of 7-day reverse repo operation in the open market will be lowered by 0.2 percentage points,” adding, “It is expected that the loan market prime rate (LPR) could also fall by 0.2-0.25 percentage points.”

A period of low-interest-rate regime tends to benefit the non-interest-rate bearing Gold price.

That said, the European Central Bank (ECB) lowered key policy rates for the third time this year on Thursday but did not provide any forward guidance on the rates outlook. However, four sources close to the matter told Reuters a fourth cut in December is likely unless economic or inflation data turns around in the coming weeks.

Meanwhile, US Retail Sales rose 0.4% in September after an unrevised 0.1% gain in August, the Commerce Department’s Census Bureau said on Thursday. Strong US data indicated robust economic prospects but that failed to alter the odds of a 25 basis points (bps) rate cut by the US Federal Reserve (Fed) in November. Markets are currently pricing in a 93% probability of such a move by the Fed next month.

Additionally, Gold price found fresh haven demand amidst escalating geopolitical tensions between Iran and Israel. Iran-backed militant group, Hezbollah, said it will escalate war with Israel after Israel’s Foreign Minister confirmed the killing of Hamas leader Yahya Sinwar on Thursday.

Looking ahead, all eyes remain on the speeches from several Fed policymakers and the rife tensions in the Middle East for further upside in Gold price. The end-of-the-week flows could also play its part in driving the volatility around Gold price.

Gold price technical analysis: Daily chart

Gold price tested $2,700 on Thursday and conquered the latter early Friday, extending the upside break of the key resistance at $2,670.

The 14-day Relative Strength Index (RSI), battles the overbougtht region near 70, at the moment, suggesting that there remains some more room to the upside before a correction could set in.

If Gold buyers manage to defend the $2,700 round level, a test of the $2,750 psychological barrier will be inevitable.

On the downside, the immediate support is seen at the intraday low of $2,692, below which a drop toward the previous resistance now turned support at $2,670 cannot be ruled out.

Acceptance below that level will expose sellers to the key 21-day Simple Moving Average (SMA) support at $2,653.

• Silver price appreciates due to safe-haven flows amid rising geopolitical tensions in the Middle East.
• Risk aversion strengthens due to the killing of Yahya Sinwar, the militant leader of Hamas.
• Demand for the non-yielding Silver increases due to the prevailing likelihood of interest rate reductions by major central banks.

Silver price (XAG/USD) extends its winning streak for the fourth consecutive day, hovering around $32.00 per troy ounce during the Asian trading session on Friday. The price of the grey metal receives support from safe-haven flows amid rising tensions in the Middle East.

Israel’s military and the Shin Bet security service confirmed on Thursday that Yahya Sinwar, the Gaza Strip Chief of the Palestinian Islamist group Hamas, was killed by Israeli forces during an operation in southern Gaza on Wednesday. Sinwar’s death has raised concerns among the families of Israeli hostages taken to Gaza by Hamas, who fear that the killing of the militant leader might increase the risk to their loved ones, according to Reuters.

The non-yielding assets like Silver gains demand due to the prevailing sentiment of interest rate reductions by major central banks. US Federal Reserve (Fed) is expected to reduce interest rates by 50 basis points by the end of 2024. According to the CME FedWatch Tool, there is a 90.8% probability of a 25 basis point rate cut in November and a 74.0% chance of another cut in December.

On Thursday, the European Central Bank (ECB) lowered its Main Refinancing Operations Rate by 25 basis points to 3.4%. Recent inflation data also indicates that both the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ) may consider potential rate cuts next month.

Since the outbreak of the conflict in Gaza last October, spikes in oil prices have been short-lived as oil production has largely been undisrupted. However, this could change if Israeli strikes target Iranian energy infrastructure, including export terminals, oil and gas fields, power plants, and storage facilities.

“This option is unlikely to gain favor with the U.S. administration, which would be wary of disrupting oil markets in the weeks leading up to the presidential election,” Kaneva noted. “Still, until the conflict is resolved, we could see a sustained geopolitical premium in crude price.”

Another key difference is that global oil inventories are much lower today. Global crude inventories currently stand at 4.4 billion barrels — the lowest on record since January 2017 and markedly below last year’s levels, when Brent was trading at $92/bbl. Meanwhile, both OECD crude and liquids inventories sit below their five-year range and five-year averages, and oil stocks at Cushing are severely depleted by the standards of the last 15 years.

“Price is a function of demand for oil inventory, which in turn depends on the willingness of users to either deplete or restock their holdings. Given the anticipation of an oversupplied market in 2025, oil consumers have so far opted to wait, causing a dislocation of the oil price from its fair value,” Kaneva explained. “However, shifting dynamics in the Middle East might create a greater urgency to replenish inventories, thereby realigning the price of oil with its fundamental level.”

Return to Double Bottom Breakout Signal

A bullish breakout of a double bottom pattern triggered in September with a rally above 2.30, and it was eventually followed by an accelerated advance to the recent swing high of 3.02. That was in an area of potential resistance around the top boundary line of a large symmetrical triangle pattern. Once the top of the pattern rejects price to the downside there is the potential to eventually reach the other side, in this case the bottom boundary line that connects with the second bottom from August 27. Notice that the line is redrawn from the original lower boundary line to account for the higher swing low in August.

200-Day MA at 2.25 is Key

Now, natural gas is in the process of revisiting the neckline of the double bottom to test it as support. However, given the bearish momentum of the descent, down by at least 22.4% from the 3.02 high in nine days, it may give way to a subsequent test of support around the 200-Day MA, now at 2.25. If a test of the 200-Day line fails to find buyers, there is the potential for a drop to test support around the 78.6% retracement at 2.12. And that also opens the door to a potential test of the lower line of the triangle.

Decline is Getting Extended

The expectation is for support to be seen at or above the 200-Day MA. Other than an initial minor test of support at the 200-Day line on September 19, this is the first real test since a bull breakout of the line triggered on September 11. It should hold and lead to an eventual bullish reversal if natural gas is to have a chance to again strengthen and eventually attempt another bullish breakout of the triangle pattern.

For a look at all of today’s economic events, check out our economic calendar.