Silver Price Forecast: XAG/USD breaks below $32.00 with developing bearish bias
- Silver may fluctuate around the eight-month low of $28.00, last touched on April 7.
- The 14-day RSI has dipped below the 50 mark, signaling increasing bearish momentum.
- Initial resistance could emerge near the nine-day EMA at $32.46, which is closely aligned with the 50-day EMA at $32.47.
Silver price (XAG/USD) is extending its losses for the second successive session, trading around $31.90 per troy ounce during the Asian hours on Thursday. Technical analysis of the daily chart indicates a weakening of a bullish outlook, as the precious metal price has broken below the ascending channel pattern.
The 14-day Relative Strength Index (RSI) has slipped below the 50 level, indicating a growing bearish bias. Additionally, the Silver price has fallen beneath both the nine-day and 50-day Exponential Moving Averages (EMAs), further highlighting the fading strength of its short-term upward momentum.
On the downside, the Silver price could navigate the region around the eight-month low of $28.00, marked on April 7.
The XAG/USD pair may initially aim for resistance near the nine-day EMA at $32.46, closely aligned with the 50-day EMA at $32.47. A decisive break above these levels could reinforce the bullish outlook, paving the way for Silver to retest the six-week high of $33.69, marked on April 24.
A further breakout beyond this point may attract additional buying interest, potentially driving the price toward the seven-month high of $34.59, last seen on March 28.
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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