Silver Price Forecast: Neckline failure keeps bears in control
- XAG/USD holds below neckline despite bouncing from two-day lows.
- Bearish RSI signals sellers retain short-term technical control.
- Break below $62.55 exposes $61.01 and $60.00 next.
Silver price registers gains of over 1%, yet it is trading below the ‘head and shoulders’ neckline, an indication that the overall trend in the short-term may be tilted to the downside. The XAG/USD trades at $64.24, after bouncing off daily lows of $62.94.
XAG/USD Price Forecast: Technical Outlook
The white metal is poised to trade sideways if it struggles to clear the neckline at around $64.10-$64.15, with bearish momentum continuing to build. Although Silver is positive in the day, momentum is tilted to the downside, as indicated by the Relative Strength Index (RSI) below the 50 neutral level, despite aiming higher.
If XAG/USD rises past $65.00, it could open the door for a recovery to the 100-day Simple Moving Average (SMA) of $66.94. On further strength, the $67.00 could be cleared, and bulls could test the $70.00 figure up next. Above waits the 200-day SMA at $73.05.
On the flip side, Silver’s first support is the $64.00 mark. If bearish momentum builds, sellers can test the 50-day SMA at $62.55 before targeting the July 22 high-turned-support at $61.01. A breach of the latter will expose $60.00.
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.
