Silver Price Forecast: XAG/USD surges above $30.00, defies strong US Dollar, high yields
- Silver rebounds from the 200-day SMA at $29.89, breaking past the $30 mark.
- A tweezers-top formation observed at the day’s high of $30.38, suggests potential pullback.
- Resistance and support are set at $30.40 and $28.78, respectively, with eyes on movements toward $31.00.
Silver price posts solid gains as it bounces off the 200-day Simple Moving Average (SMA) of $29.89 and climbs past the $30.00 threshold, up by 0.43% at the time of writing. Although US economic data boosted the US dollar and has kept US yields higher, the grey metal has extended its uptrend.
XAG/USD Price Forecast: Technical outlook
From a technical perspective, Silver buyers are struggling to remain above the $30.00 figure for the second straight day. Although they reached a daily high of $30.38, a ‘tweezers-top’ candle chart pattern could pave the way for a pullback.
The Relative Strength Index (RSI) shifted bullishly but remained at around the 50 neutral levels. This suggests that neither buyers nor sellers are in charge.
For a bullish continuation, XAG/USD must clear the $30.40 an ounce barrier. Once surpassed, the next key resistance level would be the 50-day SMA at $30.64, followed by the 100-day SMA at $30.78. On further strength, the $31.00 would be exposed.
Conversely, If XAG/USD drops below the 200-day SMA, sellers could push the grey’s metal price lower. Key support levels would be the December 31 swing low of $28.78, followed by the September 6 daily low of $27.69.
XAG/USD 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
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
