The price of silver (XAG/USD) rose over 4% on Friday, recovering to $81.00 per troy ounce as the dollar loses positive news regarding the conflict in the Middle East. The reopening of the Strait of Hormuz and the second round of talks between the US and Iran have boosted precious metal prices, and the white metal is no exception. At the time of writing, the XAG/USD pair is trading at $81.82.
XAG/USD Price Forecast: Technical Outlook
The price of the white metal continued to rise on Friday, rising for the fourth straight week to hit a five-week high of $83.06 before falling to $81.00. The price action appears to be constructive and if Silver closes the day above the latter, it will open the door to a $90.00 challenge in the miniature term.
Momentum increased as the Relative Strength Index (RSI) broke above the previous high, suggesting bulls are gathering some energy. Therefore, in the miniature term, Silver may aim higher.
The next key resistance will be the March 13 high at $85.44, followed by the March 12 high at $87.43 and the March 11 high at $89.42. Next up will be the $90.00 milestone.
On the downside, if XAG/USD falls below the key support trend line around $77.65-$77.85, expect further losses. The next support will be the 100-day SMA at $77.24, followed by the 20-day SMA at $73.77.
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 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, vast 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 assist 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.
