Silver (XAG/USD) was slightly higher on Friday as the US dollar (USD) and Treasury yields fell following lower-than-expected US non-farm payrolls (NFP) data. Despite the intraday rebound, the white metal remains on track for its first weekly decline in three weeks.
At the time of writing, XAG/USD is trading around $84.27, up almost 2.73% on the day after rebounding from the intraday low near $80.17.
Meanwhile, the escalating U.S.-Iran conflict continues to provide some support for safe-haven assets, helping to limit deeper losses in the silver market.
However, rising oil prices due to supply disruptions through the Strait of Hormuz are fueling global inflation concerns. As a result, investors are limiting their expectations for interest rate cuts by the Federal Reserve (Fed), which usually negatively affects the unprofitable metal.
From a technical perspective, silver is showing signs of consolidation after retreating from the upper Bollinger Band earlier this week. On the daily chart, price action is trying to stabilize around the middle Bollinger Band near $83, which also serves as the 20-day uncomplicated moving average (SMA), maintaining a neutral to slightly bullish near-term bias.
Dynamics indicators indicate a lack of mighty conviction about the direction of action. The relative strength index (RSI) is hovering around 50, suggesting sustainable momentum after the recent pullback.
The Moving Average Convergence Divergence (MACD) indicator (12, 26, close, 9) is flattening near the zero line, suggesting weakening bear momentum, although the MACD line remains slightly below the signal line.
The Average Directional Index (ADX) is trending down near 18, indicating that the strength of the trend is weakening and reinforcing the view that the market has entered a range-constricting phase.
On the other hand, a decisive break below the middle Bollinger Band could expose the lower Bollinger Band near $72 as the next support level, followed by the February low near $64.08.
On the other hand, a clear break above the upper Bollinger Band near $93.86 would be needed to attract modern buying interest. A move beyond this level could open the door towards the psychological $100 mark, which could initially limit gains before potentially extending towards a retest of the all-time high near $121.66.
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 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, immense industrial sectors utilize 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.
