Silver Price Forecast: XAG/USD bears have the upper hand while below 200-day SMA near $30.00

Silver kicks off the new week on a weaker note and seems vulnerable to weakening further.
The recent failures near the 200-day SMA validate the negative outlook for the XAG/USD.
A sustained strength beyond the $30.00 mark is needed to negate the near-term bearish bias.

Haresh Menghani FXStreet

Silver (XAG/USD) extends Friday's modest pullback from the vicinity of the $30.00 psychological mark and edges lower at the start of a new week. The white metal drops below the mid-$29.00s during the Asian session and now seems to have stalled its recovery from a multi-month trough touched in December.

From a technical perspective, the recent breakdown and repeated failures near the 200-day Simple Moving Average (SMA) favor bearish traders. This, along with the fact that oscillators on the daily chart are holding in negative territory, suggests that the path of least resistance for the XAG/USD is to the downside. Some follow-through selling below the $29.40 area will reaffirm the outlook and make the commodity vulnerable to weakening towards the $29.00 mark.

The downside trajectory could extend further towards the $28.75-$28.70 region, or the multi-month low, which should act as a key pivotal point. A sustained break below will set the stage for an extension of a well-established downtrend from the $35.00 neighborhood, or a multi-year peak touched in October.

On the flip side, the $30.00 mark (200-day SMA) might continue to act as an immediate strong barrier, above a bout of a short-covering could lift the XAG/USD to the next relevant hurdle near the $30.50 area. The momentum could eventually allow the white metal to reclaim the $31.00 mark and test the $31.15-$31.20 supply zone.

Silver daily chart

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

GBP/USD turns negative; slips back to 1.3530

GBP/USD comes under pressure and weakens toward the 1.3530 zone on Tuesday. Cable thus leaves behind two daily upticks in a row and retreats further from Monday’s multi-week tops past 1.3570 following humble gains in the Greenback and disheartening UK jobs data.

EUR/USD comes under pressure near 1.1570

EUR/USD could not sustain the earlier bullish attempt toward the proximity of 1.1600 the figure, coming under fresh downside pressure and revisiting the 1.1580-1.1570 band as the NA session draws to a close on Tuesday. The better tone in the US Dollar in the latter part of the day weighs on the pair amid steady volatility in the Middle East. Looking forward, the release of the FOMC Minutes takes centre stage on Wednesday.

Gold remains offered around $4,350

Gold accelerates its daily correction and revisits the $4,350 zone per troy ounce on Tuesday. The precious metal sets aside two daily advances in a row and follows the absence of direction in the US Dollar, declining US Treasury yields across the curve and continuous uncertainty in the Middle East crisis.

HYPE extends gains as Hyperliquid urges SEC action on pre-IPO futures framework

Hyperliquid (HYPE) retains a broad bullish outlook, trading above $59.00 on Tuesday. The decentralized exchange (DEX) native token marks the second consecutive day of gains as bulls return, eyeing a short-term breakout above $60.00.

Fiscal concerns and doubts on Fed independence send US yields to long-term highs

US Treasury yields keep rising across the curve this week, with the yield for the 30-year Treasury bond reaching its highest level since 2007, during the global financial crisis, at 5.33% so far on Monday. A mix of concerns about the ballooning US fiscal deficit and growing doubts about the Federal Reserve’s Independence are increasing pressure on US Government Bonds.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.