The price of silver (XAG/USD) is down more than 6.80% on the day at the end of the North American session and could end the week with losses of more than 15.70%, recording the second-largest weekly loss since the one that ended with a decline of 17.39% on January 30. At the time of writing, XAG/USD is trading at $67.89.
XAG/USD Price Forecast: Technical Outlook
While a bearish trend has occurred this week, silver remains bullish as long as bulls can keep spot prices above the February 6 low of $64.10. In the low term, XAG/USD turned negative after falling below the 100-day SMA of $72.55, extending its decline below $70.00 to a six-week low of $65.52.
However, over the medium term, the market structure has seen a succession of higher lows and higher highs, keeping the bulls in the driver’s seat.
The momentum particularly favors sellers, as evidenced by the Relative Strength Index (RSI), which broke through its neutral level and fell sharply towards the oversold area. A dip below the RSI 30 level and a quick jump back above it could open the door to a bottom forming IF the RSI continues to consolidate, making higher highs and lows.
To revive the bull market, XAG/USD needs to reclaim $70.00 and the 100-day SMA. Once breached, the next stop will be cycle low resistance at $77.98, the intraday low on March 3.
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 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 augment in demand can augment 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, huge 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.
