Silver Price Analysis: XAG/USD ends losing streak, still tumbles below $28.00
|- Silver posts 0.31% gain, finishing the week with over 4% losses.
- Technical outlook indicates potential deeper correction if prices drop below $27.00.
- Resistance seen at $28.91 if silver rallies past $28.00, with next stop above $29.00.
Silver ended its two-day losing streak yet finished the week with losses of more than 4%, as investors booked profits in the precious metal space. The XAG/USD finished Friday’s session below the $28.00 figure, with gains of 0.31%.
XAG/USD Price Analysis: Technical outlook
The drop below $28.00 has exacerbated further losses on the XAG/USD. Although it remains neutral biased, a deeper correction looms as momentum remains bearish on the sellers' side, as depicted by the Relative Strength Index (RSI).
If XAG-USD slips below $27.00, the next support would be the May 2 low of $26.02, ahead of the 200-day moving average (DMA) at $25.88.
Conversely, the grey metal rallies past the $28.00 mark, which can pave the way for a leg-up. The first resistance would be the July 25 high of $28.91. Once surpasses, the next stop is seen above the $29.00 figure.
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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