Silver Price Forecast: XAG/USD falls toward $56.50 after pulling back from nine-day EMA
- Silver may find the initial support at the seven-month low of $55.63.
- The 14-day Relative Strength Index of 35 indicates persistent bearish pressure.
- The immediate barrier lies at the upper boundary of the descending channel around $58.50.
XAG/USD extends its losses for the second consecutive day, trading around $56.80 per troy ounce during the European hours on Thursday. The technical analysis of the daily chart shows that the spot price of an asset remains slightly below the upper boundary of a descending channel, suggesting a persistent bearish domination. It shows that sellers are consistently stepping in exactly where they are expected to, preventing a breakout and maintaining the overall bearish structure.
The XAG/USD pair is retaining a bearish near-term bias as price holds below both the nine-day and 50-day Exponential Moving Averages (EMAs). The alignment of the shorter EMA beneath the longer one, with spot trading under both, suggests downside pressure remains dominant, while the 14-day Relative Strength Index (RSI) at 35 is hovering just above oversold territory, hinting at weak but not extreme selling momentum.
The XAG/USD pair may test the primary support at the seven-month low of $55.63, which was recorded on June 24. Further declines would put downward pressure on the XAG/USD pair to navigate the region around the lower boundary of the descending channel around $45.50.
On the upside, the XAG/USD pair is facing an immediate barrier at the upper boundary of the descending channel around $58.50, followed by the nine-day EMA at $58.68. A sustained break above this confluence resistance zone would cause a bullish bias and support the Silver price to explore the region around the 50-day EMA at $65.93.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
