Silver Price Forecast: XAG/USD treads water above $38.00, nine-day EMA
- Silver price may find an initial barrier at $39.13, the highest since September 2011.
- The bullish bias gains momentum as the 14-day Relative Strength Index remains above the 50 level.
- Immediate support is located at the nine-day Exponential Moving Average, around the $37.79 level.
Silver price (XAG/USD) holds position after registering mild losses in the previous session, trading around $38.20 per troy ounce during the Asian hours on Monday. The technical analysis of the daily chart suggests the price of the precious metal moves upwards within an ascending channel pattern, indicating a persistent bullish bias.
The 14-day Relative Strength Index (RSI) remains above the 50 level, suggesting that bullish bias is strengthening. Additionally, the Silver price is trading above the nine-day Exponential Moving Average (EMA), indicating that short-term price momentum is stronger.
On the upside, the XAG/USD pair may target $39.13, the highest since September 2011, reached on July 14. A successful breach above this level could support the Silver price to explore the region around the upper boundary of the ascending channel around the psychological level of $41.50.
The Silver price may test the immediate support at the nine-day EMA of $37.79, followed by the ascending channel’s lower boundary at $37.20 level. Further declines would weaken the bullish bias and prompt the XAG/USD pair to test the 50-day EMA at $35.91. A break below this level would dampen the medium-term price momentum and prompt the price of Silver to navigate the region around the two-month low at $31.65, which was recorded on May 15.
XAG/USD: 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.