Silver Price Forecast: XAG/USD rebounds and reclaims $31.50
- Silver rises 0.39%, trading at $31.82 as buyers push prices above the opening level, reclaiming $31.50.
- RSI hints at consolidation ahead, with a break above $32.30 needed to challenge the YTD high of $32.71.
- A fall below $31.00 could lead to a deeper pullback, with key support levels at $30.50 and the 100-DMA at $29.74.
Silver price recovered some ground on Wednesday, advanced some 0.39%, and reclaimed the $31.50 figure as buyers stepped in and pushed the grey’s metal price above its opening price. Higher US Treasury bond yields capped its advance, yet XAG/USD trades at $31.82 as Thursday’s Asian session begins.
XAG/USD Price Forecast: Technical outlook
Silver price has printed back-to-back bullish days, yet it failed to surpass the $32.00 figure, exposing the grey metal to selling pressure. The Relative Strength Index (RSI) hints that buyers remain in control, but it has turned flat, indicating that consolidation lies ahead.
If XAG/USD clears the October 2 peak of $32.30, it will resume its uptrend and challenge the year-to-date (YTD) high of $32.71. A breach of the latter will push Silver to $33.00 before testing on October 1, 2012, high at $35.40.
On the other hand, if XAG/USD dives beneath the October 2 daily low of $31.00, this would sponsor a leg-down to the psychological $30.50 figure, followed by the 100-day moving average (DMA) at $29.74, ahead of the 50-DMA at $29.32.
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
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
