Silver Price Forecast: XAG/USD recovers further from multi-week low, climbs above mid-$32.00s
- Silver gains some positive traction and snaps a three-day losing streak to a multi-week low.
- The bearish technical supports prospects for the emergence of some selling at higher levels.
- A sustained move beyond the $34.00 mark is needed to negate the near-term negative bias.
Silver (XAG/USD) builds on the previous day's goodish bounce from the $31.65 area, or a nearly three-week low, and gains some follow-through traction during the Asian session on Friday. The white metal climbs back above mid-$32.00s in the last hour and for now, seems to have snapped a three-day losing streak, though the technical setup warrants some caution before positioning for any further gains.
The overnight sustained breakdown below the 100-hour Simple Moving Average (SMA) was seen as a key trigger for bearish traders. Moreover, oscillators on daily/4-hour charts have been gaining negative traction and suggest that the path of least resistance for the XAG/USD is to the downside. Hence, any subsequent move up might still be seen as a selling opportunity and remain capped.
The $32.80 area could now act as an immediate barrier ahead of the $33.00 round-figure mark. Some follow-through buying, however, might trigger a short-covering move and lift the XAG/USD to the $33.70 hurdle. This is followed by the $34.00 round figure, which if cleared decisively would negate the near-term negative outlook and shift the bias in favor of bullish traders.
On the flip side, the $32.25-$32.20 region now seems to offer immediate support ahead of the $32.00 mark. The subsequent downfall could drag the XAG/USD towards the overnight swing low, around the $31.65 region. A convincing break below the latter could drag the white metal to sub-$31.00 levels, or the 200-day SMA, en route to the $30.55-$30.50 intermediate support and eventually to the $30.00 psychological 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.
