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XAG/USD declines for a second straight session, retreating from a 12-year high around $37.32.
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Ongoing geopolitical risks and persistent supply shortages continue to support a bullish medium-term outlook.
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Bearish divergence on the daily RSI emerges, with key support expected in the $35.30–$35.50 range.
Silver (XAG/USD) edged lower for the second straight session on Thursday, easing back from a fresh 12-year high of $37.32 reached on Wednesday. The pullback comes as traders book profits in response to the Federal Reserve’s cautious policy update. Although the Fed held interest rates steady as expected, it signaled that borrowing costs may remain elevated for longer, providing some relief to the US Dollar and exerting modest pressure on precious metals.
At the time of writing, XAG/USD is down approximately 1.10% for the day, trading near $36.35 during the U.S. session. The retreat reflects a combination of profit-taking and a rebound in the Dollar, as markets reassess the Fed’s stance and adjust short-term risk positions.
Despite the short-term dip, the broader backdrop for Silver remains fundamentally bullish. Elevated geopolitical tensions—particularly between Israel and Iran—continue to fuel safe-haven demand, supporting Silver alongside Gold. Meanwhile, structural supply tightness has underpinned the metal’s impressive rally this year.
Industrial demand also plays a key role in the metal’s bullish case. Silver is widely used in solar panel production and electric vehicles, and ongoing demand from these sectors has kept the global silver market in deficit for five consecutive years. Industry reports project a supply shortfall of over 110 million ounces in 2025, one of the largest in the past decade. This supply-demand imbalance provides a strong foundation for buying on dips.
Technical Outlook: Momentum Cooling, Support in Focus
Technically, the overall trend for Silver remains bullish, but signs of short-term exhaustion are emerging. A bearish divergence is forming on the daily chart, with the Relative Strength Index (RSI) pulling back from overbought territory even as price action set a new high. This divergence suggests weakening upward momentum and the possibility of a near-term correction.
The Moving Average Convergence Divergence (MACD) remains in positive territory but is also showing signs of losing steam, reinforcing caution in the near term.
Key support is seen in the $35.30–$35.50 zone, which coincides with the 21-day Exponential Moving Average (EMA) and the recent breakout level. A decisive break below this area could open the door for a deeper correction toward $34.50—a previous resistance level now acting as horizontal support.
On the upside, if bulls reclaim control and push XAG/USD above $36.50, a retest of the $37.30 high is possible. A sustained break above that could clear the way for a move toward the $38.00 handle, assuming momentum revives.
