Silver Price Forecast: XAG/USD rebounds toward $41.50 as bullish bias persists
- Silver price may retest the psychological level of $41.50 near 14-year highs.
- The 14-day Relative Strength Index is positioned below the 70 level, suggesting a strong uptrend prevails.
- The primary support lies at the crucial level of $41.00.
Silver price (XAG/USD) recovers its recent losses from the previous session, trading around $41.10 per troy ounce during the early European hours on Wednesday. The technical analysis of the daily chart suggests the price of the precious metal moves sideways within an ascending channel pattern, indicating that market bias remains bullish.
The 14-day Relative Strength Index (RSI) is positioned slightly below the 70 level, suggesting that the Silver price is hovering around overbought territory, though the strong uptrend persists with buyers firmly in control. Additionally, the XAG/USD pair remains above the nine-day Exponential Moving Average (EMA), indicating that short-term price momentum is stronger.
The XAG/USD pair may retest a crucial resistance zone at the psychological level of $41.50, followed by the $41.67, the highest since September 2011, reached on September 8. A successful break above this level would lead the Silver price to test the upper boundary of the ascending channel around the $42.80. Further advances would strengthen the bullish bias and open the doors for the metal price to approach the crucial level of $43.00.
On the downside, the initial support lies at the psychological level of $41.00, followed by the nine-day EMA at $40.65 and the ascending channel’s lower boundary around $40.20. A break below the channel would weaken the bullish bias and put downward pressure on the Silver price to reach the 50-day EMA of $38.49.
XAG/USD: Daily 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.
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