Silver Price Forecast: XAG/USD challenges strong resistance at nine-day EMA around $32.50
- Silver price may find initial support at the six-week low of $31.65.
- The 14-day RSI remains below the 50 level, indicating a potential for a bearish bias.
- The nine-day EMA of $32.48 appears as the immediate resistance.
Silver price (XAG/USD) seems to extend its losses for the third successive session, trading around $32.30 per troy ounce during the European hours on Tuesday. Technical analysis of the daily chart indicates a developing bearish bias, as the precious metal price consolidates within a descending channel pattern.
The 14-day Relative Strength Index (RSI) remains below the 50 level, indicating a potential for a bearish bias. Additionally, the Silver price is positioned below both the nine-day Exponential Moving Average (EMA), further highlighting the short-term downturn momentum is in play.
On the downside, the Silver price could retest the six-week low at $31.65, which was recorded on May 15. A break below this level could put downward pressure on the metal price to test the lower boundary of the descending channel pattern around $30.90. A break below the channel could reinforce the bearish bias and open the doors for the price of the precious metal to navigate the region around the eight-month low of $28.00, marked on April 7.
The XAG/USD pair is testing its immediate barrier at the nine-day EMA of $32.48, followed by the descending channel’s upper boundary around the psychological level of $33.00. A break above this crucial resistance zone could weaken the bearish bias and support the pair to test the seven-week high at $33.69, reached on April 24, followed by the seven-month high of $34.59, last seen on March 28.
XAG/USD: 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
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
