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Silver (XAG/USD) climbs to a fresh all-time high on Friday, buoyed by dovish Federal Reserve expectations alongside strong industrial and investment demand. At the time of writing, XAG/USD is trading around $56.40, with prices up over 12% this week and on track to log a seventh straight monthly gain.

A tightening supply backdrop is adding further support to the rally, with reports indicating that inventories at Shanghai Futures Exchange warehouses have dropped to their lowest level since 2015. Market data also show that physical silver turnover on the Shanghai Gold Exchange has slipped to a nine-year low.

According to the Silver Institute, 2025 is on track to mark the fifth consecutive year of a structural supply deficit, with global output from mining and recycling still struggling to keep pace with rising demand from solar, electronics and investment channels.

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From a technical standpoint, bulls remain firmly in control, driving XAG/USD deeper into uncharted territory after a clean breakout from the falling-wedge formation. The rally comes after a period of subdued momentum, marking a clear shift back in favour of upward continuation.

XAG/USD continues to trade comfortably above all major moving averages, reinforcing the strength of the prevailing uptrend. The 21-day Simple Moving Average (SMA) near $50.72 is rising steadily and remains the first layer of dynamic support, while the 50-day and 100-day SMAs sit much lower.

On the downside, any pullback is likely to attract fresh dip-buying interest, with initial support at the $55.00-$54.00 zone. A break below this area would shift attention toward the $50.70-$50.00 region, reinforced by the rising 21-day SMA.

Momentum indicators support the bullish narrative. The Moving Average Convergence Divergence (MACD) extends above the Signal line, with both in positive territory and a widening histogram, suggesting strengthening bullish momentum. The Relative Strength Index (RSI) has climbed to 71, entering overbought territory, although there are no clear signs of exhaustion.

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