Silver Price Forecast: XAG skyrockets above $60, tests 50-day SMA
- XAG/USD jumps over 4%, but the 50-day SMA caps upside.
- Bullish RSI signals buyers may attempt further gains.
- Failure below $62 exposes $59.40 and yearly lows.
Silver (XAG/USD) price surges more than 4% on Wednesday as the Greenback remains on the back foot due to softer-than-expected jobs and data, though the fall was capped as business activity in the services sector continued to expand. Also, a test of key technical resistance at the 50-day Simple Moving Average (SMA) near $62.65 limits the white metal advance. At the time of writing, XAG/USD trades at $62.21, its highest level in the last month.
Silver Price Forecast: Technical outlook
As of writing, it seems that Silver is poised to extend its gains, but it is crucial to clear the 50-day SMA. The Relative Strength Index (RSI) shows that momentum has shifted bullish, meaning that the path of least resistance is upwards.
If bulls want to regain total control, they must reclaim the psychological $65 level. Once done, their focus needs to be on the 100-day SMA at $69.22, before challenging the $70 milestone, last reached in mid-June. The next area of interest emerges at the 200-day SMA at $71.06.
Downwards, if XAG/USD retreats and ends the day below $62, it opens the door for a move to the August 3 swing low of $59.40. If broken, this opens the way towards retesting yearly lows of $54.77.
Silver Price Chart – Daily
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.
