The price of silver (XAG/USD) will fall to almost $72.85 during Asian trading hours on Tuesday. The white metal remains under selling pressure amid rising tensions in the Middle East. Reports of Iranian attacks on ships in the Strait of Hormuz are driving up oil prices, fueling inflation fears.
This has led to expectations that the US Federal Reserve (Fed) may keep interest rates elevated for an extended period of time, making underperforming assets such as silver less attractive. Minneapolis Fed President Neel Kashkari said on Sunday that further interest rate increases cannot be ruled out, especially as the risk of inflation remains elevated due to rising energy prices related to the conflict in Iran.
Technical analysis:
On the daily chart, XAG/USD maintains a short-term bearish bias as the spot trade remains below the 100-day exponential moving average (EMA) and 20-day uncomplicated moving average (SMA) of the Bollinger Bands. A relative strength index (14) of 44 indicates frail bearish momentum rather than capitulation, suggesting that downward pressure remains, but without an oversold signal that would indicate an imminent forceful rebound.
On the upper end, initial resistance lies at the 100-day EMA at $74.45, followed by the Bollinger Band midline at around $76.00, while the upper Bollinger Band near $80.85 marks a more distant limit in the event of a sharper miniature bounce. On the other hand, the May 4 low of $72.20 represents the first noticeable support. A decisive break below this level would expose the lower Bollinger Band at around $71.15.
(The technical analysis for this story was written with the lend a hand of an AI tool.)
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 forceful 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 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 lend a hand 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.
