Silver Price Forecast: XAG/USD tests $30.00, next barrier appears at nine-day EMA

Silver price tests a “throwback support” at the psychological level of $30.00.
The pair remains confined within a descending channel pattern, signaling a strong bearish bias.
A decisive break below the throwback support could drive the Silver price to approach its three-month low of $27.69.

Akhtar Faruqui FXStreet

Silver price (XAG/USD) extends its losses for the second successive day, trading around $30.00 per troy ounce during the European hours on Thursday. The daily chart analysis indicates a dominant bearish bias, with the pair consolidating within a descending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 mark, further supporting the bearish sentiment.

The XAG/USD pair continues to trade below the 14- and nine-day Exponential Moving Averages (EMA), reinforcing a bearish outlook and signaling weakening short-term price momentum. This points to limited buying interest and raises the likelihood of further price declines.

In terms of the upside, the Silver price finds a primary barrier around the nine-day Exponential Moving Average at $30.54, followed by the 14-day EMA at $30.78. Further resistance appears around the upper boundary of the descending channel at 31.20 level.

On the downside, the Silver price tests a “throwback support” at the psychological level of $30.00. A successful breach below this level could deepen bearish sentiment, potentially driving the asset price lower toward its three-month low of $27.69, followed by the descending channel's lower boundary at $27.50.

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.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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