Silver Price Analysis: Capped below $75, as momentum remains bearish
- Silver capped by 20-, 50-, and 100-day SMAs below $80.
- RSI recovers toward 50, signaling fading but still bearish momentum.
- Break below $72.40 exposes $70.86 and $70.00 support levels.
Silver price trims some of its Monday losses, recovering some ground up 0.69% in the day, trading at $73.22 after bouncing off a daily low of $72.42. An improvement in risk appetite is underpinning the precious metals segment. Still, the white metal remains capped by the 20-day Simple Moving Average (SMA) at $75.94, a crucial level for buyers if they would like to challenge the $80.00 figure again.
XAG/USD Price Analysis: Technical outlook
From a technical perspective, further downside is seen as the key 20-, 50- and 100-day SMAs, each at $75.94, $77.77 and $79.52, respectively, stand on the way towards the $80.00 psychological figure.
The Relative Strength Index (RSI) is bearish, but sellers are losing momentum as the index approaches the 50-neutral level.
If Silver finished Tuesday’s session near the week’s lows at around $72.40, expect additional losses. The next support would be the April 29 swing low of $70.86, followed by the $70.00 mark.
Up next, the next area of interest would be the 200-day SMA at $62.52.
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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