Silver Price Forecast: XAG/USD rebounds from 200-SMA on H4, $38.25 barrier holds the key
- Silver reverses an Asian session dip to the 200-SMA pivotal support on H4.
- The mixed technical setup warrants caution before placing directional bets.
- A move beyond $38.20-$38.25 should pave the way for additional gains.
Silver (XAG/USD) attracts some dip-buyers near the $37.80 region during the Asian session on Monday. The white metal climbs back above the $38.00 mark, hitting a fresh daily peak in the last hour.
From a technical perspective, the XAG/USD once again finds decent support near the 200-period Simple Moving Average (SMA). This level should act as a key pivotal point. A convincing break below it will be seen as a key trigger for bearish traders and could pave the way for deeper losses.
The subsequent fall could drag the XAG/USD to the next relevant support near mid-$37.00s en route to the $37.00 neighborhood. Some follow-through selling would expose the monthly swing low, around the $36.20 region, before the white metal weakens further below the $36.00 mark.
Meanwhile, oscillators on the daily chart are still holding with a slight positive move. This, in turn, warrants some caution before placing aggressive bearish bets around the XAG/USD. That said, any further move up is likely to confront a stiff barrier near the $38.20-$38.25 region.
A sustained strength beyond the latter, however, might shift the bias in favor of bulls and lift the XAG/USD to the $38.50-$38.55 intermediate hurdle en route to the multi-week top, around the $38.75 zone. The momentum could extend further towards reclaiming the $39.00 mark.
Silver 4-hour 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
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
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