Silver Price Analysis: XAG/USD surges and clears 100-day SMA and $75
- Silver rallies sharply as falling yields and weaker Dollar boost demand.
- Break above 100-day SMA and $75 confirms strong upside momentum.
- Next resistance at $77.32 and $80.00 caps further bullish extension.
Silver prices rebounded, surging sharply more than 7% as Oil prices took a hit, which pushed the Greenback lower due to its close positive correlation. Also, falling US Treasury yields are driving the white metal higher, up to $75.00 by March's end.
XAG/USD Price Analysis: Technical Outlook
On Monday, I wrote that "The bias in the short term is slightly bearish, with XAG/USD capped on the upside by the 100-day SMA at $74.11." At the time of writing, Silver prices cleared the latter and were on their way north, clearing the $75.00 figure.
Worth noting that the Relative Strength Index (RSI) remains bearish. Still, buyers are driving the RSI toward its neutral level, while XAG/USD has surpassed the latest higher high.
For a bullish continuation, XAG/USD must clear the 20-day SMA at 77.32, followed by the $80.00 figure. A clear break opens the door to challenge the 50-day SMA at $84.03.
Conversely, if Silver slips below the 100-day SMA, the next support would be at $74.00, ahead of the $70.00 milestone. Once cleared, the white metal could dive towards the March 26 daily low of $66.73.
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.
