Silver Price Forecast: Oversold rebound faces $52.50 resistance
- XAG/USD rallies nearly 3% after rebounding from support near $49.00.
- RSI recovers from extreme oversold conditions, signaling improving bullish momentum.
- Break above $52.32 exposes $55.00, while $48.87 remains critical support.
Silver price bounces off around $49.00, gaining nearly 3% on Monday due to US Dollar weakness and falling US yields, as energy prices tumbled amid speculation of a resolution to the US-Iran conflict. Price action in the white metal hasn’t changed abruptly. The XAG/USD trades at $50.53 at the time of writing.
Silver Price Forecast: Technical outlook
On Monday, XAG/USD has recovered some ground, but it remains downward-biased as the 50-day Simple Moving Average (SMA) crosses below the 100-day SMA, and, as of writing, the SMAs are in order to confirm a bearish trend.
Despite this, the Relative Strength Index (RSI) indicates that buyers are gaining momentum, but sellers remain in control. This is because the index turned extremely oversold last Thursday as Silver tumbled below $49.00 per troy ounce.
For a bullish reversal, XAG/USD must clear the October 30 high of $52.32. Once cleared, the next stop is the $55.00 psychological figure, followed by the October 20 high at $58.61, ahead of the $60.00 mark.
On the downside, the first support is last Friday’s low of $48.87, followed by the $48.50 and the $48.00 psychological levels.
Silver 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.
