Silver Price Forecast: XAG/USD breaks below $32.50, support appears at nine-day EMA
- Silver price may test the primary support at the nine-day EMA of $32.21.
- The 14-day RSI remains above the 50 mark, confirming a bullish bias.
- A successful return to the ascending channel would further reinforce the positive outlook.
Silver price (XAG/USD) remains subdued for the third successive day, trading around $32.40 during the European hours on Monday. Technical analysis on the daily chart indicates a weakening bullish bias, with the grey metal breaking below an ascending channel pattern.
However, Silver price remains above the nine-day and 50-day Exponential Moving Averages (EMAs), signaling that short-term momentum is stronger. Additionally, the 14-day Relative Strength Index (RSI) is positioned above the 50 mark, confirming the bullish bias is in play.
A successful return to the ascending channel would strengthen the bullish outlook, supporting Silver price in testing the four-month high of $33.40, recorded on February 14. A breakout above this level could drive the metal price toward the channel's upper boundary at $34.20.
To the downside, the XAG/USD pair may find initial support at the nine-day EMA of $32.21. A break below this level could weaken short-term price momentum, pushing Silver's price toward the $31.61 support level. Further downside support is seen at the two-month low of $30.70, recorded on February 3.
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.