Silver Price Forecast: XAG/USD moves below $32.50 near 50-day EMA
- Silver price could navigate the region around the $30.00 support area.
- The 14-day RSI breaking below the 50 level suggests the bearish bias is active.
- The pair is testing initial resistance at the 50-day EMA of $32.44.
Silver price (XAG/USD) is extending its losses for the third successive session, trading around $32.30 per troy ounce during the European session on Thursday. The technical analysis of the daily chart suggests a potential bearish shift, with the grey metal falling below the existing ascending channel pattern.
Silver price remains below both the nine- and 50-day Exponential Moving Averages (EMAs), indicating an ongoing weaker short-term price momentum. Furthermore, the 14-day Relative Strength Index (RSI) breaks below the 50 level, suggesting the bearish bias is active.
On the downside, the Silver price could navigate the region around the $30.00 support area. A break below this level could put downward pressure on the precious metal to test the eight-month low of $28.00, marked on April 7.
On the upside, the XAG/USD pair is testing the 50-day EMA at $32.44, followed by the nine-day EMA at the $32.72 level. A break above these levels could revive the short-term price momentum and support the pair to return to the ascending channel pattern. A further barrier appears around the seven-month high at $34.59, last seen on March 28.
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.
