Silver Price Forecast: XAG/USD jumps above $108 as trader war fuels “sell America” trade
- Silver rises over 5% weekly as US trade-war tensions revive aggressive “sell America” positioning.
- Shooting-star candle and RSI divergence signal waning momentum after Monday’s failed push near $118.
- Bulls need a break above $110, while sub-$100 risks a deeper corrective pullback.
Silver price trades choppy on Tuesday, after extending its gains on Monday sponsored by heightened geopolitical tensions, the US trade-war with its allies, re-ignited the “sell America” trade during the day. The XAG/USD trades at $108.00 after bouncing off daily lows of $103.00, modestly up 0.05%
XAG/USD Price Forecast: Technical outlook
Silver’s technical picture shows the parabolic uptrend, but it seems that buyers are losing steam, following a run-up near $118.00 on Monday, but at the end, the close of the day was $103.89, forming a “huge shooting star,” a bearish candle with a $13.00 top shadow.
Worth noting that the Relative Strength Index (RSI) although showing signs that buyers remain in charge, it diverges from price action. The latter had achieved successive series of higher highs, contrarily to the RSI, registering lower highs. Therefore, a negative divergence looms and could pave the way for a retracement.
For a bullish continuation, traders must clear $110.00 so they can remain hopeful for higher prices. Otherwise, a pullback looms and it could be exacerbated if Silver prices drop below the $100.00 mark.
In that event, XAG/USD first support would be the January 23 daily low of $96.14, followed by the January 21 swing low of $90.46.
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.
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