Silver (XAG) Forecast: Silver Rally Eyes $64.67 Break as Buyers Push the Silver Market

Silver is experiencing a strong rally today, signaling that buyers are dominating the market and pushing prices higher. The focus is now on the $64.67 level. Surpassing this price point, which previously marked a reversal top on Friday, would negate the bearish outlook and reinforce the ongoing uptrend.

On the downside, $60.80 remains a key level to watch. A pivot point at $60.52 could provide an entry for sellers, should they emerge. As of 13:00 GMT, XAGUSD is trading at $63.97, a gain of $2.06 or 3.32%.

Industrial Demand Remains a Primary Driver

Underlying fundamentals continue to support the current bullish sentiment. Strong industrial demand is a major factor propelling the rally. The increasing use of silver in solar panel installations is tightening the market, with demand expected to remain high through the end of the year, due to silver's superior conductivity.

Beyond solar, the electronics and electric vehicle sectors are also contributing to demand. This robust real-world demand reduces the need for speculative investment to drive price increases. Supply is struggling to keep pace, as mines face challenges with lagging production and declining ore grades. Because silver is often a byproduct of other mining operations, production cannot be easily increased to meet rising demand. This supply-demand imbalance encourages traders to maintain long positions, even after significant price increases.

Monetary Policy Adds Support

The current environment of a weaker dollar and lower Treasury yields is also helping to boost silver prices. Gold's recent upward trend provides additional support for precious metals, bolstering confidence among silver buyers. With the dollar near multi-month lows and Treasury yields declining, non-yielding assets like silver have room to appreciate.

Investment demand remains solid, with continued interest in silver ETFs and physical silver. The gold-silver ratio is also influencing traders, as silver is perceived as undervalued compared to gold, attracting further buying.

Upcoming Economic Data as Potential Catalyst

This week's Non-Farm Payroll (NFP) data and the November Consumer Price Index (CPI) could introduce volatility into the market. The jobs report is expected to show modest hiring and a slight increase in unemployment. The CPI data will be based on a combination of two months of data, due to the BLS's delayed release of October's figures.

The lack of clarity surrounding the economic data could encourage traders to favor precious metals until the figures are fully understood. Weaker-than-expected economic data could help silver test and potentially break through the $64.67 resistance level. Stronger data might slow the rally, but is unlikely to reverse the overall positive sentiment unless yields rise significantly.

Bullish Outlook Persists

As long as the price remains above $60.80, the outlook for silver remains positive. A successful break above $64.67 could trigger more aggressive buying, particularly if gold continues its upward momentum and economic data weakens real yields. Currently, the market favors long positions, with buyers firmly in control.