Silver Price Forecast: XAG/USD maintains constructive outlook above $32.00

Silver price extends the rally to near $32.15 in Wednesday’s early European session, up 0.90% on the day.
The positive view of Silver prevails above the key 100-day EMA with the bullish RSI indicator.
The immediate resistance level emerges at the $33.00-$33.05 region; the key support level to watch is in the $31.15-$31.00 zone.

Lallalit Srijandorn FXStreet

Silver price (XAG/USD) extends its upside to around $32.15 during the early European session on Tuesday. The white metal edges higher amid uncertainty and trade war worries, which boost the safe-haven demand.

Technically, the bullish trend of Silver remains in play as the commodity is well-supported above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 55.00, displaying bullish momentum in the near term.

The first upside target for white metal emerges at the $33.00-$33.05 region, representing the psychological level and the upper boundary of the Bollinger Band. Extended gains could see a rally to $33.40, the high of February 14. The additional upside filter to watch is 34.55, the high of October 29, 2024.

On the other hand, the confluence of the round figure, the lower limit of the Bollinger Band, and the 100-day EMA in the $31.15-$31.00 zone act as key support levels for XAG/USD. Sustained trading below the mentioned level could see a drop to the next contention level at $29.52, the low of January 25.

Silver price (XAG/USD) Daily Chart

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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