Silver Price Forecast: XAG tracks trendline, sellers target 200-day SMA
- Silver consolidates near the 50-day SMA after reclaiming $75.00.
- RSI flattens in bearish territory, suggesting sellers still hold momentum.
- Break below $73.09 exposes $70.87 and 200-day SMA support.
Silver (XAG/USD) price consolidates near $75.00 on Monday, down 0.36% as sellers cap the white metal's advance around the 50-day Simple Moving Average (SMA) at $75.98, with the key resistance level ahead of the precious metal reaching the 100-day SMA at $81.00.
XAG/USD Price Forecast: Technical outlook
Silver remains poised to trade sideways after clearing the bottom trendline of an ascending channel, which opened the door to a drop below the 50-day SMA and to four-week lows of $71.79 in May 28. Since then, XAG/USD has been moving higher but has failed to clear $77.00, forming a ‘doji’ pattern.
The Relative Strength Index (RSI) turned bearish in mid-May and keeps heading lower, indicating increasing seller momentum, but the index stayed flat over the weekend. Hence, the path of least resistance is downwards.
The XAG/USD first support is the May 19 low at $73.09; the next support is the May 28 low at $71.79, ahead of the April 29 low at $70.86. A deeper decline would expose the 200-day SMA to $67.12.
Above, the first resistance for XAG/USD is the psychological levels $76.00, $76.50 and $77.00. Once surpassed, the next stop is the 20-day SMA at $77.89, followed by $78.00. A breach of the latter will expose the 100-day SMA at $81.27.
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.
