Silver (XAG/USD) breaks the 200-day plain moving average (SMA) near $67.79 on Friday, with the white metal posting a daily loss of nearly 8% and could end the week down nearly 10% amid a stronger-than-expected U.S. nonfarm payrolls report.
XAG/USD Price Forecast: Technical Outlook
Silver extended its losses this week, hitting a nine-week low of $68.03 as sellers target the 200-day SMA. Momentum as measured by the Relative Strength Index (RSI) shows that sellers dominate as the index approaches oversold territory.
If XAG/USD falls below the 200-day SMA, the next area of ​​concern will be the March 23 low of $61.01, ahead of the psychological level of $60.00. Below this area, the next support will be the November 13 low, which will develop into support at $54.39.
In the event of a bullish reversal, silver’s first resistance is the $70.00 level. Above this level, the next resistance is the May 28 lower resistance at $71.79, followed by the psychological level of $75.00. A breach of the latter will reveal the 50-day SMA at $76.17.
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 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 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 boost in demand can boost 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 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 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.
