Silver Price Forecast: XAG/USD rebounds though remains below 34.00

Silver trades at $33.64, bouncing back from a weekly low of $33.09 as RSI approaches overbought territory, signaling bullish momentum.
Key resistance levels include the October 24 high at $34.29, YTD high at $34.86, and October 2012 peak at $35.40.
A bearish daily close could shift bias to the downside, with first support at $33.24, followed by $33.00 and October 17 low of $31.32.

Silver prices staged a comeback after dipping to a weekly low of $33.09, though it remains below its opening price by 0.10% late during Friday’s North American session. At the time of writing, XAG/USD trades at $33.64.

XAG/USD Price Forecast: Technical outlook

The grey metal remains upwardly biased, even though it has posted back-to-back days recording new weekly lows. Momentum backs buyers as depicted by the Relative Strength Index (RSI), reaccelerating toward overbought territory. Therefore, the path of least resistance is tilted to the upside.

XAG/USD first resistance would be the October 24 high at $34.29, followed by the year-to-date (YTD) high at $34.86. On further strength, buyers could challenge October 2012 high at $35.40.

Conversely, if XAG/USD prints a bearish daily close, it could pave the way for further downside. the first support would be the October 24 daily low of $33.24, followed by $33.00. A breach of the latter, Silver could tumble as low as $31.32, to the October 17 swing low.

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.

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