Silver Price Forecast: XAG/USD struggles to build momentum above $60.00
- Silver struggles to hold above $60 after reaching a two-week high of $60.94.
- A positive MACD points to mild bullish momentum, while the ADX near 39 signals a strong underlying trend.
- The upper Bollinger Band at $62.39 caps the upside, with the 20-day SMA at $58.86 offering support.
Silver (XAG/USD) trades with modest gains on Wednesday, supported by a slight pullback in the US Dollar (USD). However, the metal lacks strong upside momentum as traders weigh energy-driven inflation risks and their impact on the Federal Reserve’s (Fed) interest-rate outlook.
At the time of writing, XAG/USD trades around $59.90 after hitting a two-week high of $60.94 earlier in the day.
Traders expect the Fed to keep monetary policy restrictive for longer, while pricing in at least one interest-rate hike this year. Higher borrowing costs typically weigh on non-yielding assets such as Silver.
From a technical perspective, Silver bulls are struggling to hold above the psychological $60.00 mark. Still, XAG/USD trades above the 20-day Simple Moving Average (SMA), the Bollinger middle band, near $58.86, suggesting that buyers retain some control.
Moving Average Convergence Divergence (MACD) is modestly positive, suggesting a slight bullish tilt in short-term pressure, but Average Directional Index (ADX) at 39 indicates the underlying trend remains fairly strong, limiting the scope for abrupt reversals.
On the upside, initial resistance is seen at the intraday high of $60.94, followed by the upper Bollinger Band near $62.39. A sustained break above this area could open the door toward the $70.00 barrier.
On the downside, the 20-day SMA near $58.86 offers immediate support, followed by the lower Bollinger Band at $55.34. A deeper decline could expose the psychological $50 level.
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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