- Silver prices hit 12-year highs at $34.86, clearing key psychological levels, despite rising US Treasury yields.
- Overbought RSI suggests room for further gains, with next resistance levels at $35.40 (October 2012 high) and $44.22 (August 2011 peak).
- Key support levels include $33.46, followed by the October 17 low of $31.32, in case of a pullback.
Silver price rallied to twelve-year highs of $34.86 on Tuesday, due to risk aversion and even though US Treasury yields are rising. At the time of writing, the XAG/USD trades at $34.86, up over 3% with traders eyeing the $35.00 figure.
XAG/USD Price Forecast: Technical outlook
XAG/USD has ripped through key psychological levels during the last three days, clearing the $31.00-$34.00 area, an indication that buyers are gathering steam. This means the uptrend remains intact and could extend towards the October 2012 peak.
Momentum supports buyers, though the Relative Strength Index (RSI) is overbought. Nevertheless, due to the steepness of the rally, the RSI’s most extreme reading would be 80. Hence, bulls have enough room to spare to push Silver prices higher.
The XAG/USD first resistance would be $35.00. Once cleared, the next stop would be the October 2012 high at $35.40, followed by the August 2011 peak at $44.22, and ahead of the all-time high at $49.83.
Conversely, if XAG/USD retreats below $34.0, the first support would be the current week's low of $33.46. The next support would be the October 17 daily low of $31.32 on further weakness.
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.
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