Silver Price Forecast: XAG/USD trades below $32.50, nine-day EMA

Silver price may depreciate toward the psychological level of $32.00.
Immediate resistance appears around the nine- and 14-day EMAs at the $32.83 and $32.84 levels, respectively.
The nine-day EMA is aligned with the 14-day EMA; a downward crossover would indicate a weakening of short-term momentum.

Silver price (XAG/USD) depreciates to near $32.20 during the European session on Wednesday. The daily chart analysis indicates a potential shift in momentum from bullish to bearish, as the nine-day Exponential Moving Average (EMA) aligns with the 14-day EMA. A downward crossover here would signal weakening short-term momentum.

Additionally, the 14-day Relative Strength Index (RSI) is consolidating just below the 50 level, indicating an ongoing bearish bias. However, traders would like to see further movement to gain a clear trend direction for the XAG/USD pair.

Moreover, the Moving Average Convergence Divergence (MACD) line diverging below the signal line suggests a potential bearish pressure on the Silver price. Despite this, the overall trend remains bullish as the MACD line remains above the centerline (zero line).

On the downside, Silver price may encounter immediate support at the psychological level of $32.00. A drop below this level could exert downward pressure on the precious metal, potentially pushing the price toward the seven-week low at $30.12, recorded on October 8.

In terms of the upside, the Silver price could target the nine- and 14-day EMAs at the $32.83 and $32.84 levels, respectively. A breakthrough above these EMAs could trigger a shift toward a bullish bias, with the potential for the price to revisit the area near the all-time high of $34.87, reached on October 22.

XAG/USD: Daily Chart

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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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