Silver prices (XAG/USD) hit the $100.00 milestone on Friday, hitting an all-time high of $100.39 before recovering to triple digits. The gray metal is seeing intraday gains of over 4% after rebounding from intraday lows of $96.04.
Even though geopolitical risks have eased following the de-escalation of the US-EU trade war, the US dollar (USD) is facing headwinds, continuing to deepen its losses throughout the year.
According to TASS, talks between Russia, Ukraine and the US have started in Abu Dhabi with the aim of finally reaching an agreement to end the war.
XAG/USD Price Forecast: Technical Outlook
Silver’s parabolic uptrend continues, as evidenced by the price action. Momentum as measured by the relative strength index (RSI), although overbought, remains off the most extreme level of 87.22, suggesting further growth in XAG prices.
The first resistance for XAG/USD would be $100.50 and then $101.00. On the other hand, if silver pulls back towards the $96.00 level, it would create a “bearish embrace” pattern on the chart, which could exacerbate a downside correction, at least towards the January 15 intraday low of $86.19.
XAG/USD price chart – daily
Silver FAQs
Silver is a precious metal that investors like to trade. Historically, it has been used as a store of value and a medium of exchange. Although less popular than gold, investors may turn to silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during periods of high inflation. Investors can buy physical silver in coins or bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can fluctuate due to many factors. Geopolitical instability or fear of a deep recession may push silver prices higher due to its safe-haven status, although to a lesser extent than gold. As a non-yielding asset, silver tends to rise at lower interest rates. Its movements also depend on the behavior of the US dollar (USD) when the asset is priced in dollars (XAG/USD). A forceful dollar tends to keep the price of silver at bay, while a weaker dollar will likely push prices higher. Other factors such as investment demand, mining supply – there is much more silver than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in sectors such as electronics and solar energy, because it has one of the highest electrical conductivities of all metals – greater than copper and gold. An raise in demand can raise prices, while a decrease usually lowers them. The dynamics of the economies of the United States, China and India can also contribute to price fluctuations: in the case of the United States and especially China, enormous industrial sectors exploit silver in various processes; in India, consumer demand for precious metals for jewelry production also plays a key role in pricing.
Silver prices usually follow the movements of gold. When gold prices rise, silver tends to follow suit because their status as safe-haven assets is similar. The gold-to-silver ratio, which shows the number of ounces of silver needed to equal the value of one ounce of gold, can support determine the relative valuation of the two metals. Some investors may view a high ratio as an indicator that silver is undervalued or gold is overvalued. On the contrary, a low ratio may suggest that gold is undervalued relative to silver.
