Silver prices surged to a recent record high on Wednesday after rebounding from an intraday low of $86.91 to hit a recent all-time high of $93.52 and appear poised to break the $100.00 barrier in the near future. At the time of writing, XAG/USD is trading at $93.05, up over 7%.
US economic data showed that producer-side inflation was 3% in November, exceeding forecasts for nominal and core prices. Retail sales also improved in November, but the US dollar did not appreciate.
Some of the reasons include a threat to the Fed’s independence after the Department of Justice (DOJ) summoned Chairman Jerome Powell over the renovation of Fed buildings. Fed Chairman Powell said these are just pretexts because the central bank is focused on dictating monetary policy using the tools at its disposal rather than following the recommendations of the White House administration.
XAG/USD Price Forecast: Technical Outlook
Silver’s upward trend is parabolic and has increased by almost 30% since the beginning of the year. Momentum remains bullish, as illustrated by the Relative Strength Index (RSI), which, despite being overbought, trend strength indicates that the most extreme level will be 80.
If XAG/USD clears $94.00, the next stop will be $94.50 and then $95.00. Next up is a $100.00 print. Conversely, if XAG/USD falls below $90.00, the first support will be the January 14 low of $86.91, followed by the December 29 cycle high of $83.75
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal that investors willingly 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 appreciate 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 mighty 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 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 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.
