Silver Price Forecast: XAG rebounds, capped below 50-day SMA as bears hold grip
- Silver rebounds from weekly lows but remains capped below the 50-day SMA.
- RSI stays bearish, keeping the path of least resistance lower.
- Break below $73 exposes $71.79 and 200-day SMA support.
Silver (XAG/USD) price bounces off weekly lows at $72.46 on Thursday, trading near $74.00, up over 1.70% on the day, as market mood is mixed, with investors rotating out of technology stocks and into other sectors, even though tensions around the Middle East conflict remain high.
XAG/USD Price Forecast: Technical outlook
The XAG/USD pair continues to consolidate near the 50-day Simple Moving Average (SMA) at $76.18, with sellers having the upper hand so far, as buyers have failed to clear the latter, which could open the way to test the $80.00 level.
The Relative Strength Index (RSI) is bearish, indicating that sellers are gaining momentum. Hence, the path of least resistance is downwards.
Silver's first support level is the $73.00 figure. A breach of the latter opens the door to challenge May 28's daily low of $71.79, ahead of the psychological $70.00 level. Below here, the 200-day SMA is up next at $67.65.
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.
