The price of silver (XAG/USD) fell 0.16% on Friday, consolidating around the $75.00-76.00 area and virtually unchanged near the 50-day elementary moving average (SMA) at $75.70.
XAG/USD Price Forecast: Technical Outlook
Silver looks set to continue consolidating after breaking below the rising channel support trendline and 50-day SMA, but the white metal has regained the $75.00 level.
In mid-May, the RSI indicator turned bearish and continues to show declines, suggesting that sellers are gaining momentum, but the index fell before the weekend.
Above, the first resistance for XAG/USD is the 20-day SMA at $77.92, followed by $78.00. A breach of the latter will reveal the 100-day SMA at $81.15.
A break below the psychological level of $75.00 further opened the door to further declines.
If XAG/USD breaks below the May 19 low of $73.09, the next support will be the April 29 low of $70.87. A deeper decline would expose a 200-day SMA of $65.97 and then a one-year low of $61.02.
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 powerful 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 boost in demand can boost 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, immense industrial sectors apply 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 facilitate 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.
