Silver Price Analysis: XAG/USD remains below $31.00 mark, bulls flirt with 200-hour SMA
|- Silver regains positive traction and stalls a two-day corrective slide from over a one-month top.
- The technical setup warrants some caution before positioning for a further intraday move up.
- A breakout through a short-term trading range is needed to confirm the near-term direction.
Silver (XAG/USD) attracts some buyers during the Asian session on Tuesday, snapping a two-day losing streak and stalling the recent pullback from the $31.75 area or its highest level since May 31 touched last week. The white metal currently trades around the $30.80-$30.85 region, up 0.45% for the day, with bulls now awaiting a sustained move beyond the 200-hour Simple Moving Average (SMA) before positioning for further gains.
Looking at the broader picture, the XAG/USD remains confined in a multi-day-old trading range. Furthermore, neutral technical indicators on the 1-hour chart warrant some caution before positioning for a firm intraday direction. Meanwhile, oscillators on the daily chart are holding in the positive territory and suggest that the path of least resistance for the commodity is to the upside. That said, a convincing break below the short-term trading range support, near the $30.40-$30.35 area, will be seen as a fresh trigger for bearish traders and pave the way for deeper losses.
The XAG/USD might then accelerate the downfall and weaken further below the $30.00 psychological mark, towards testing the next relevant support near the $29.75 horizontal zone. The downward trajectory could extend further towards intermediate support near the $29.40 region en route to the $29.00 round figure and the June monthly swing low, around the $28.55 area.
On the flip side, any further move up is more likely to face some resistance near the $31.00 mark, representing the top end of the trading range. Acceptance above the said handle will suggest that the corrective decline has run its course and pave the way for a move towards the $31.30 hurdle before the XAG/USD eventually climbs to the monthly swing high, around the $31.75 region. The momentum could extend further towards reclaiming the $32.00 mark for the first time since May 30.
Silver 1-hour 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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