Silver Price Forecast: XAG/USD soars as Democrats gain control of Houses

• Silver price surges towards $51.85 as Democrats win control of the House and Senate.
• Democratic control of the federal legislature could leave the US Dollar under pressure.
• Monetary tightening is expected from the Fed at its December meeting.

With Democrats securing majorities in both chambers of the United States (US) Congress in the midterm elections, Silver (XAG/USD) has jumped almost 4% to around $51.85 during Wednesday’s European trading. The election outcome has prompted a sharp rally in the white metal.

Questions over whether US President Donald Trump’s administration can continue its current policies, particularly support for Artificial Intelligence (AI) spending, have emerged following the Democrats’ victory. These concerns have significantly increased the appeal of safe-haven assets such as Silver. The uncertainty is, however, expected to maintain pressure on the US Dollar (USD).

Dollar sentiment weakens as US technology shares come under fresh pressure

The election is likely to put US equities under pressure, analysts at Commerzbank warn, highlighting that “the more tech-heavy Nasdaq in particular, are likely to come under pressure”. They note that recent Dollar strength has been closely linked to “enthusiasm surrounding US equities and the resulting capital inflows.”

A reversal in US shares could, in the analysts’ assessment, mean that “Dollar weakness could therefore become somewhat more entrenched over the coming hours.” The prospect of a prolonged pullback in the currency as growth expectations are revised is reinforced by Commerzbank’s observation that “if investment begins to lose momentum, markets could start pricing in a weaker phase of US growth, which would weigh on the Dollar,”

Friday’s release of October US Nonfarm Payrolls (NFP) figures will provide the next major catalyst for Silver. Expectations for Federal Reserve (Fed) interest rates are likely to be significantly affected by the report.

A 25 basis points (bps) interest rate increase to the 4.00%-4.25% range at the December meeting is currently seen as highly likely, according to the CME FedWatch tool.

Before then, investors will focus on October’s US ADP Employment Change and ISM Services PMI releases later in the day.

Silver Retains a Bearish Near-Term Technical Bias

Trading at $51.77 on the daily chart, XAG/USD continues to signal a bearish near-term outlook below its 20-day Exponential Moving Average (EMA) of $54.83. Continued failure to regain this short-term trend benchmark points to persistent downward pressure. Meanwhile, a Relative Strength Index (RSI) reading of 36.69 indicates that momentum remains weak: although it has recovered from oversold territory, bullish conviction is still lacking.

A sustained move above the first resistance level, the 20-day EMA near $54.83, would be required to temper the prevailing bearish tone. The main support lies at the 11-month low of $48.62. A breach of that level would leave scope for further declines towards $45.

(The technical analysis of this story was written with the help of an AI tool. Know more.)