Silver Price Forecast: XAG/USD hits 14-year high above $39.25
- Silver clears YTD high at $39.12, forming higher highs and higher lows.
- RSI enters overbought zone, but not yet signaling exhaustion or reversal.
- Key resistance lies at $39.50 and $40.00; support seen at $38.50 and $37.34.
Silver price rally continued during the week, posting gains of over 0.94% on Tuesday and reaching 14-year highs, levels last seen in September 2011. At the time of writing, XAG/USD trades at $39.25.
XAG/USD Price Forecast: Technical outlook
Silver price has climbed above the previous YTD high of $39.12 and continues carving successive series of higher highs and higher lows, an indication that bulls are in charge. Additionally, the Relative Strength Index (RSI) has entered overbought territory, indicating a strong trend but not yet at extreme levels, which could trigger a pullback.
If XAG/USD clears $39.50, this clears the path to challenge $40.00 an ounce. On the flip side, failure to hold above $39.00 clears the path to test the $38.50, followed by the July 21 daily low of $38.11. Once surpassed, the next stop will be the 20-day SMA at $37.34
XAG/USD Price – 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
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
