Silver Price Forecast: Bears crowd $60 after six-percent weekly rout
- XAG/USD ends week down over 6%, approaching $60.00 support.
- Bearish RSI reinforces lower-high, lower-low structure beneath key moving averages.
- Break below $60.00 exposes $56.57 and YTD low $54.77.
Silver price retreats on Friday, dropping about 0.76% as US Treasury yields edged higher, capping US Dollar depreciation, while investors punished the Greenback following a soft US jobs report. The XAG/USD trades at $60.50 at the time of writing.
XAG/USD Price Forecast: Technical Outlook
The white metal finished with weekly losses of over 6%, below the confluence of the 50- and 100-day Simple Moving Averages (SMAs) at $64.06-$64.74 and poised to test the $60.00 milestone in the near term.
Bearish momentum continues to build as the Relative Strength Index (RSI) remains below its 50-neutral level and closer to the oversold level. Also, price action is respecting the series of lower highs and lower lows, further confirmation that sellers are in charge.
The first support for XAG/USD is $60.00. If breached, a potential move to the August 3 low of the day (LOD) at $56.57 is on the cards. A decisive breakout will expose the year-to-date (YTD) low of $54.77.
On the other hand, for a bullish reversal, buyers must push Silver back above the 50- and 100-day SMA, before claiming the $65.00. Even though that is a significant recovery, the bearish structure remains in charge, unless the bull clears the August 28 swing high of $71.12, the latest cycle high.
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.
