Silver Price Forecasts: XAG/USD extends gains with bulls eyeing $80.00
- XAG/USD pierces April 22 highs at the $78.70 area, aiming for $80.00.
- Precious metals rally as lower Oil prices push US Treasury yields down.
- Technical momentum indicators are reaching overbought levels.
Silver (XAG/USD) appreciates for the second consecutive day on Thursday, with precious metals buoyed amid lower Treasury yields, as the decline in Oil prices has eased bets on US Federal Reserve (Fed) rate hikes. XAG/USD is now testing April 22 highs at $78.70, with bulls aiming for the $80.00 psychological area.
News that the US and Iran are getting close to a peace deal boosted investors’ appetite for risk on Wednesday and sent the US Dollar (USD) tumbling, providing a fresh boost to precious metals. Apart from that, Oil prices declined nearly 8%, pushing US Treasury yields lower and providing additional support to the yieldless precious metals.
Technical Analysis: Technical indicators are reaching overbought levels
XAG/USD performed a sharp recovery on Wednesday, printing a bullish engulfing candle on the daily chart, which, together with the higher low on Monday, confirms that a trend shift is in progress.
Technical indicators are in bullish territory, but the oversold levels in the 4-hour Relative Strength Index (RSI) suggest that the latest advance is stretched and a consolidation or some pullback might be ahead. The Moving Average Convergence Divergence (MACD) in the same timeframe, however, remains positive, reinforcing upside pressure.
Recent price action suggests that we are in the C-D leg of a Gartley pattern, aiming for the April 20 highs, right above the $80.00 psychological level. Here, the pair might take a rest before setting its focus on April's peak at $83.06. On the downside, the previous range top, at the $76.70 area, might provide some support ahead of the weekly low, at the $72.15 area.
(The technical analysis of this story was written with the help of an AI tool.)
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
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
