Silver Price Analysis: Rally stalls at 20-day SMA, bulls lose steam
- Silver consolidates near $75 after failing to clear 20-day SMA.
- RSI flattens in bearish territory, signaling weakening bullish momentum.
- Break below 100-day SMA exposes $70.00 and $66.72 support levels.
Silver price (XAG/USD) fails to gain traction, consolidates around $75.00 on Wednesday as US Treasury yields pared losses, while the white metal failed to surpass key resistance at the 20-day SMA at $76.90. At the time of writing, XAG/USD trades at $75.07, virtually unchanged.
XAG/USD Price Analysis: Technical Outlook
The white metal bias remains tilted to the upside, but failure to clear the 20-day SMA has exacerbated a move towards $75.00, casting doubt on the March 31 breakout. Worth noting that the Relative Strength Index (RSI) turned flattish at bearish territory, an indication that buyers are losing strength.
For a bullish resumption, XAG/USD needs to surpass the 20-day SMA. Further upside is seen past the $77.00 figure, with the next area of interest being the $80.00 milestone. Key resistance lies overhead at the 50-day SMA at $83.62.
Conversely, a drop below the 100-day SMA at $74.43 and sellers will face support at $70.00 ahead of the March 26 swing low of $66.72.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
