Silver Price Analysis: XAG/USD drops below $31.00 on high US yields
- Silver holds near familiar levels, trading at $30.69 with minimal losses of 0.28%.
- Technical analysis suggests possible pullback below $30.50 before resuming the uptrend.
- Key resistance levels at $31.00 and $31.75, with potential to reach YTD high of $32.51.
Silver prices remained at familiar levels on Monday, printing minimal losses of 0.28% as US Treasury bond yields from the belly and long-end curve edged higher. At the time of writing, the XAG/USD traded at $30.69 after hitting daily highs of $31.08 a troy ounce.
XAG/USD Price Analysis: Technical outlook
Silver consolidates beneath $31.00, though hovering around the ‘double bottom’ chart pattern neckline.
Momentum remains flat as measured by the Relative Strength Index (RSI), which aimed lower but stood in bullish territory. Hence, XAG/USD could be headed for a pullback before the uptrend continues.
If XAG/USD drops below the psychological $30.50 level, it could drive the spot price toward $30.00. Once cleared, the next target would be the confluence of the April 12 high and the 50-day moving average (DMA) at $29.82/79.
On the flip side, the first resistance for XAG/USD would be at $31.00. Once this is cleared, the next resistance would be at $31.75, followed by the $32.00 psychological level. Surpassing this, the May 29 peak of $32.15 comes into focus, ahead of the year-to-date (YTD) high of $32.51. Further gains are anticipated above this level.
XAG/USD Price Action – Daily 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.