Silver (XAG/USD) fell sharply by more than 30% on Friday as the precious metals segment is punished by financial markets, with the gray metal falling by more than $38 at the time of writing. XAG/USD is trading at $76.91, after hitting an intraday high of $118.46.
XAG/USD Price Forecast: Technical Outlook
As the price dropped, silver price broke through key support levels such as $100, $90, $80 and appears to be on track to clear the $70.00 milestone if not for the 50-day Simple Moving Average (SMA) of $73.51.
The Relative Strength Index (RSI) fell parabolic from around 83 to 42 before turning bearish during the session.
If XAG/USD falls below $70.00, it could deepen the decline towards the 100-day SMA at $60.00
Conversely, if silver closes daily above the December 29 high of $83.75, the uptrend could remain intact and buyers could challenge higher prices in the near future.
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 sturdy 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 enhance in demand can enhance 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, gigantic industrial sectors operate 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.
