Silver Price Forecast: XAG/USD breaks below 100-hour SMA pivotal support near $62.50
- Silver retreats from the vicinity of the record high and erodes a part of the overnight gains.
- The intraday technical setup favors bearish traders and backs the case for a further decline.
- A sustained strength and acceptance above the $64.00 mark would negate the negative bias.
Silver (XAG/USD) attracts some sellers during the Asian session on Tuesday and reverses a part of the previous day's move up back closer to the record high. The white metal slides further below mid-$62.00s in the last hour, losing over 2.5% for the day.
The latest leg down drags the XAG/USD below the 100-hour Simple Moving Average (SMA) pivotal support and sets the stage for deeper losses. Given that oscillators on the 1-hour chart have been gaining negative traction, some follow-through selling will be seen as a key trigger for bears and reaffirm the negative outlook.
The XAG/USD might then accelerate the fall towards the $62.00 round figure and extend the downward trajectory further towards the next relevant support near the $61.45 region en route to last Friday's swing low, around the $60.80 zone. The white metal might eventually decline to test the $60.00 psychological mark.
On the flip side, bulls need to wait for acceptance above the $64.00 round figure before placing fresh bets. The subsequent move up could allow the XAG/USD to challenge the all-time peak, around the $64.65 region, before aiming to conquer the $65.00 psychological mark, which, if cleared, would set the stage for additional gains.
Silver 1-hour chart
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
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
