Silver Price Forecast: XAG/USD bulls might now aim to reclaim $32.00 and retest YTD peak
- Silver gains positive traction for the second straight day and stands tall near a two-month high.
- The technical setup favors bullish traders and supports prospects for a further appreciating move.
- Any meaningful corrective decline might still be seen as a buying opportunity and remain limited.
Silver (XAG/USD) attracts buyers for the second straight day on Friday and sticks to its gains above the $31.00 mark, near a two-month peak through the first half of the European session.
From a technical perspective, the recent breakout through a short-term descending trend-line resistance, around the $29.35 area, which coincided with the 100-day Simple Moving Average (SMA), was seen as a fresh trigger for bullish traders. Adding to this, the emergence of some dip-buying on Thursday, along with positive oscillators on the daily chart, suggest that the path of least resistance for the XAG/USD is to the upside.
The positive outlook is validated by the fact that the white metal now seems to have found acceptance above the $31.00 mark. Hence, a subsequent move up beyond the $31.45 intermediate hurdle, en route to the July swing high around the $31.75 zone and the $32.00 mark, looks like a distinct possibility. The momentum could extend further and allow the XAG/USD to challenge a one-decade high, around mid-$32.00s touched in May.
On the flip side, weakness below the $31.00 mark now seems to find decent support near the $30.70 horizontal zone. Any further decline might still be seen as a buying opportunity and remain limited near the $30.00 psychological mark. Some follow-through selling could expose the $29.35 confluence resistance breakpoint, now turned support, which should now act as a strong near-term and a key pivotal point for the commodity.
A convincing break below could accelerate the downfall and drag the XAG/USD below the $29.00 mark, towards testing the next relevant support near the $28.20-$28.15 zone. This is followed by the $28.00 mark and strong horizontal support near the $27.70 area, or the monthly low, which if broken might shift the near-term bias back in favor of bearish traders.
Silver daily 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.
