Silver Price Analysis: XAG/USD consolidates around $29.00 amid lack of catalyst
|- Silver trades with minimal gains of 0.05%, consolidating above the $29.00 mark.
- Downward momentum is flattening, suggesting potential range-bound trading in the near term.
- Key levels: Support at $28.57 (June 26 low) and resistance at $30.17 (50-DMA) before targeting $31.00.
Silver price extended its losses yet bounced off daily lows beneath $29.00 and trade with minimal gains of 0.05% as Tuesday’s Asian session begins. At the time of writing, the grey metal trades at $29.11, set to remain consolidated at around current levels.
XAG/USD Price Analysis: Technical outlook
Silver remains bullish-biased but is set to remain consolidated above the $29.00 figure. Momentum remains downward biased, though it has begun to turn flat, paving the way for some range-bound trading.
If XAU/USD drops below $29.00, the next support would be the June 26 low at $28.57, followed by the 100-DMA at $28.23.
For a bullish continuation, the XAG/USD must climb above $29.50 so buyers can test the $30.00 mark. On further strength, Silver’s next resistance would be the 50-DMA at $30.17 before challenging the $31.00 mark.
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.
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