Silver Price Forecast: XAG/USD shines bright, tests 200-day SMA resistance

Silver prices climb over 1%, hitting the crucial 200-day SMA at $29.87.
Technical forecast suggests resistance at $30.00 and the dual SMA levels of $30.73/77, setting the stage for potential gains to $31.00.
Support levels loom at December's low of $28.74, with further downside risk at the early September low of $27.69.

Christian Borjon Valencia FXStreet

Silver's price rose over 1% on Monday and faces key resistance at the 200-day Simple Moving Average (SMA) at $29.87. At the time of writing, XAG/USD trades at $29.87 after bouncing off a daily low of $29.41 and reaching a high of $30.34.

XAG/USD Price Forecast: Technical outlook

Silver is facing strong resistance at $29.87, the 200-day SMA, which is crucial for buyers if they want to push spot prices higher. The uptrend remains intact, yet bulls need to clear the latter, followed by the $30.00 mark.

Up next is the confluence of the 50 and 100-day SMAs at $30.73/77, followed by $31.00 a troy ounce.

Conversely, if XAG/USD falls short of clearing the 200-day SMA, sellers could challenge the December monthly low of $28.74, followed by the September 6 low of $27.69.

XAG/USD Price Chart – Daily

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.

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.

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