Silver Price Forecast: XAG/USD holds above $33.50 but struggles to rise
- Silver price hovers near $34.00 resistance with positive momentum, supported by RSI in bullish territory.
- A breakout above $34.00 could target the YTD high at $34.86, followed by the October 2012 peak at $35.40.
- Key support levels are the October 25 low at $33.09 and October 17 pivot low at $31.32, with further downside to the 50-day SMA at $30.82.
Silver price clings to gains above $33.50 yet struggles to clear the $34.00 mark amid falling through high US 10-year T-note yields at 4.260%. At the time of writing, the XAG/USD trades at $33.79, up by 0.30%.
XAG/USD Price Forecast: Technical outlook
The grey metal remains bullish, though it has failed to clear the October 25 daily peak at $34.01, opening the door to complete a ‘bullish harami’ candle pattern.
Momentum remains positive, with the Relative Strength Index (RSI) in bullish territory and aiming upwards. Therefore, the XAG/USD could test $34.00 in the short term.
If XAG/USD climbs past $34.00, the next resistance would be the year-to-date (YTD) high at $34.86. A breach of the latter will expose the October 2012 peak at $35.40.
Conversely, if Silver price extended its losses below the October 25 swing low of $33.09, this could expose the October 17 pivot low at $31.32. On further weakness, XAG/USD's next support would be the 50-day Simple Moving Average (SMA) at $30.82.
XAG/USD Price Chart – Daily
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.
