Silver Price Forecast: XAG/USD trades with negative bias near $30.60; bullish potential intact
- Silver struggles to capitalize on the overnight move-up and ticks lower on Wednesday.
- The setup favors bulls and supports prospects for the emergence of some dip-buying.
- A convincing break and acceptance below $33.00 would negate the positive outlook.
Silver (XAG/USD) attracts some sellers during the Asian session on Wednesday and erodes a part of the previous day's strong move up. The white metal currently trades around the $33.65-$33.60 area, down 0.30% for the day, though the downside seems limited on the back of a bullish technical setup.
The XAG/USD last week showed some resilience below the $33.00 mark and the 100-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent move-up and positive oscillators on the daily chart validate the positive outlook. Hence, any further intraday slide could be seen as a buying opportunity and remain limited near the said handle.
A convincing break below, however, might prompt some technical selling and drag the XAG/USD further below last week's low, around the $32.65 region, towards testing the $32.00 round figure. This is followed by supports near the $31.80 zone (March 11 low), which if broken might shift the bias in favor of bears and expose the monthly low, around the $31.10 area.
On the flip side, bulls might now wait for a move beyond the $33.80 area, or the weekly high touched earlier this Wednesday, before placing fresh bets. The XAG/USD might then reclaim the $34.00 mark and climb further to a multi-month top, around the $34.20-$34.25 region touched on March 18, en route to a multi-year peak, around the $34.85 zone touched in October.
XAG/USD 4-hour chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.