Silver Price Forecast: XAG/USD extends rally closes to $33.00
- Silver surges past $32.00, eyeing key resistance at $33.00 and $33.20.
- RSI signals bullish strength, with price action forming higher highs and lows.
- Downside risks emerge if XAG/USD drops below $32.00, with support at $31.50 and 100-day SMA at $31.21.
Silver's price rallies continued for the third straight day since bottoming last Friday near $31.81. It gained over 2.14% late during the North American session and trades at $32.63. Broad US Dollar weakness despite falling US Treasury bond yields.
XAG/USD Price Forecast: Technical outlook
The grey metal cleared the $32.00 figure and skyrocketed towards $33.00, finishing Wednesday’s session near $32.83. Momentum is skewed to the upside, with price action registering higher highs and higher lows, while the Relative Strength Index (RSI) aims higher, towards refreshing previous peaks.
Therefore, XAG/USD's first resistance would be $33.00. On further strength, key resistance levels would be exposed, like the February 20 high at $33.20m, followed by the February 14 $33.39 cycle highs.
Conversely, if XAG/USD falls beneath $32.00, the next support would be the $31.50 area before sellers could challenge the 100-day SMA at $31.21. On further weakness, the next support would be $31.00, followed by the 200-day SMA at $30.48.
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
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
