Silver Price Forecast: XAG/USD rebounds above $28.00, remains sideways
- XAG/USD climbs to $28.21, reclaiming the key $28.00 level after US JOLTS data hints at rate cuts.
- Momentum remains flat despite a bullish RSI, with key resistance at the 100-DMA of $29.14.
- Sellers must push below $28.00 to test support at $27.71 and the 200-DMA at $26.59.
Silver price recovers in late trading on Wednesday, gains over 0.74%, and trades at $28.21 at the time of writing.
US data reassured that the labor market is cooling, as the latest US JOLTS report portrays. This increased the odds for a 50-basis point interest rate cut at the next Fed meeting in two weeks. The grey metal rose, while US yields dropped and undermined the Greenback. This allowed the precious metal to reclaim the $28.00 figure.
XAG/USD Price Forecast: Technical outlook
The XAg/USD continues to hover around $28.00, yet it achieved a daily close above the latter. Momentum remains flat even though the Relative Strength Index (RSI) is bullish, but the slope is almost horizontal, hinting that neither buyers nor sellers are in control.
Key technical indicators like the 50—and 100-day moving averages (DMAs) above price action hint that Silver could test lower prices in the short term. Still, sellers need to clear key support levels on their way south.
They must drag XAG/USD prices below the $28.00 figure, followed by the September 3 low of $27.71. Further weakness will sponsor a leg-down toward the August 14 swing low of $27.18, followed by the 200-day moving average (DMA) at $26.59.
Conversely, buyers need to reclaim the 100-DMA at $29.14 if they would like to regain control.
XAG/USD Price Action – 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
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
