Silver (XAG) Forecast: Uptrend Intact—Chase the Breakout or Play for Value Level Dip?
LONDON (January 16) Silver futures are edging lower on Friday as investors booked profits for a second session, with worries over escalating tensions in Iran easing geopolitical concerns. The short-term fundamentals remain bullish, with this week’s consumer and producer inflation reports allowing the Fed to skip a January rate cut while leaving open the chance of a rate cut later in the year. Even after Thursday’s strong initial claims showing, the market is still predicting at least two rate cuts.
Trump’s Iran Stance Whipsaws Silver Markets
Another short-term event impacting the price action in silver is the possibility of U.S. military intervention in Iran. For the past week, deadly violence has gripped the country, with the government being blamed for killing hundreds of individuals protesting for reform. Silver rose as the violence flashed across television screens and President Trump promised to come to their rescue. However, Trump killed the rally when he said he received assurances there would be no public executions.
Tariff Relief Provides Near-Term Clarity
Another factor driving this week’s volatility was the announcement from President Trump that he was holding off on new tariffs targeting imports of critical materials, easing near-term trade disruption risks, according to the Shanghai Metal Market. Once traders reprice the market’s structural drivers, silver could resume its rally.
Supply Constraints and Industrial Demand Underpin Long-Term Outlook
The longer-term fundamentals remain intact, with silver still in short supply amid increasing industrial demand from AI data centers, EV production, and solar panel manufacturing.
The price action this week indicates that the long-term fundamentals will provide support while short-term factors drive the volatility.
Technical Picture: Uptrend Intact with Key Levels in Focus
Daily Silver (XAG/USD)
Technically, the main trend is up. The trend assessment is being validated by the series of higher bottoms and higher tops on the swing chart, a firmly intact trendline, and the 50-day and 200-day moving averages.
The swing chart shows that a trade through $93.51 will signal a resumption of the uptrend, while a move through $73.84 changes the main trend to down. The nearest support is a 50% level at $83.67. This level represents short-term value, and we’re likely to see new buyers emerge on a pullback into it.
Trendline support has guided the market higher since the November 21 bottom at $48.64. It also held when tested recently at $73.84. Today, it moves up to $78.88.
The 50-day moving average at $64.45 and the 200-day moving average at $45.39 provide long-term support.
Strategic Crossroads: Chase Momentum or Wait for Value?
Looking ahead, traders are weighing the current fundamentals—rate cuts and geopolitics—against their strategies. The debate centers around buying strength and chasing the market through $93.51 or playing for value and waiting for a pullback into the first support at $83.67.
FXEmpire
