Silver Price Forecast: XAG/USD dips amid high US yields
- Silver declines amid profit-taking and high U.S. Treasury yields.
- Bearish momentum as silver tests 50-day SMA at $30.38.
- Recovery possible if silver breaches 100-day SMA at $30.93, aiming for December high of $32.34.
Silver price extended its losses for the second consecutive day amid high US Treasury bond yields and traders booking profits ahead of next week’s Federal Reserve’s monetary policy decision. Nevertheless, Trump’s policies could spark a flight to safety and lift the grey metal higher. The XAG/USD trades at $30.44, down more than 1%.
XAG/USD Price Forecast: Technical outlook
Silver is trading sideways, capped on the upside and the downside, by key resistance and support levels, while the momentum, as measured by the Relative Strength Index (RSI), suggests that sellers are in charge. However, they need to clear the 50-day Simple Moving Average (SMA) at $30.38 so they can challenge the confluence of the 200 and 20-day SMA at $30.03/05. Once those levels are surpassed, the next support will be the January 14 low of $29.48.
Conversely, if buyers lift XAG/USD past the 100-day SMA at $30.93, look for further upside, with the following key resistance at $32.34, the December 12 peak.
XAG/USD Price Chart – Daily
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.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
