Silver Price Forecast: XAG/USD struggles near $50.00, weekly low as bearish bias persists
- Silver struggles to capitalize on a modest intraday uptick, hitting a fresh one-week low on Friday.
- The technical setup favors bearish traders and backs the case for a further depreciating move.
- Any attempted recovery move is likely to be sold into near the trading range support breakpoint.
Silver (XAG/USD) attracts some sellers following an intraday uptick to the $50.80 region and drops to a fresh one-week low during the early European session on Friday. The white metal, however, lacks follow-through and currently trades around the $50.00 psychological mark, nearly unchanged for the day.
From a technical perspective, the XAG/USD maintains a bearish near-term bias following the recent repeated failures to make it through the 100-period Exponential Moving Average (EMA) on the 4-hour chart. Moreover, the previous day's breakdown below the $51.00 mark, or the lower boundary of a one-week-old trading range, validated the negative outlook amid negative momentum indicators on the said chart.
In fact, the Relative Strength Index (RSI) at 37.64 stays in bearish territory, hinting at sustained downside pressure without yet reaching oversold conditions. Moreover, the Moving Average Convergence Divergence (MACD) indicator stands in negative territory with the latest reading at -0.21, reinforcing the notion of a weak recovery profile and favoring further consolidation or slippage rather than a decisive rebound.
Meanwhile, initial resistance emerges at the trading range support breakpoint, around the $51.00 round figure, where any attempted recovery would likely face its first meaningful supply zone. A move above this should allow XAG/USD to retest the 100-period EMA near $52.86. A sustained strength beyond the latter would be needed to ease the current bearish tone and open the way for a more durable recovery.
On the downside, bearish traders could aim to challenge the $49.00 support area, while keeping an eye on whether RSI drifts into the oversold zone that could eventually slow the decline. This is followed by the year-to-date low, around the $48.60-$48.55 region, touched last week, which, if broken, would set the stage for an extension of the downtrend from the late August swing highs – levels above the $71.00 mark.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD 4-hour chart
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.
Recommended Articles
