Silver Price Forecast: XAG/USD depreciates to near $28.50 due to bearish bias
- Silver price faces challenges as daily chart analysis suggests a bearish bias.
- The MACD line has crossed below the signal line, indicating potential downward pressure on the Silver price.
- Silver price may navigate the area around the lower boundary of the descending channel at the $27.70 level.
Silver price (XAG/USD) extends its losses for the third consecutive day, trading around $28.50 per troy ounce during Tuesday’s Asian hours. The analysis of the daily chart shows that the pair is positioned within a descending channel, suggesting a bearish bias. Additionally, the 14-day Relative Strength Index (RSI) is positioned below the 50 level, confirming a bearish trend.
The momentum indicator Moving Average Convergence Divergence (MACD) line has crossed below the signal line, it is generally considered a bearish signal. This crossover suggests that the momentum is shifting from bullish to bearish, indicating potential downward pressure on the Silver's price.
In terms of support, the Silver price may navigate the region around the lower boundary of the descending channel at the $27.70 level. A break below this level could strengthen the bearish bias and drive the asset’s price toward throwback support $26.50 level.
On the upside, the Silver price tests an immediate resistance at the upper boundary of the descending channel around the nine-day Exponential Moving Average (EMA) at the $28.97 level. A breakthrough above the latter could lead the XAG/USD pair to explore the region around the three-month high at the $31.76 level.
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.
