Silver Price Forecast: XAG/USD flat lines below $37.00 amid mixed technical signals
- Silver lacks any firm intraday direction and consolidates during the Asian session.
- The mixed technical setup warrants caution before placing fresh directional bets.
- A sustained move beyond $37.30-$37.35 would be seen as a key trigger for bulls.
Silver (XAG/USD) struggles to capitalize on the overnight goodish rebound from the $36.15 region, or a multi-day trough, and oscillates in a narrow band during the Asian session on Tuesday. The white metal currently trades around the $36.80 area, nearly unchanged for the day amid a mixed technical setup.
The daily Relative Strength Index (RSI, 14) remains above 50, though the Moving Average Convergence Divergence (MACD) histogram and the signal line are yet to confirm bullish bias. This, in turn, suggests that any move beyond the $37.00 mark could stall near the $37.30-$37.35 region, or the highest level since February 2012 touched earlier this month. Some follow-through buying, however, would set the stage for an extension of a nearly three-month-old uptrend.
On the flip side, the $36.50-$36.45 area could offer immediate support to the XAG/USD ahead of the $36.15-$36.10 region. A further decline below the $36.00 mark could extend towards the $35.50-$35.40 horizontal zone. The latter represents the lower boundary of a short-term trading range held over the past month or so and should act as a key pivotal point. Hence, a convincing break below would shift the near-term bias back in favor of bearish traders.
The XAG/USD might then accelerate the fall towards the next relevant support near the $35.00 psychological mark. The subsequent downfall has the potential to drag the white metal to an intermediate support near the $34.75 en route to the $34.45 region.
Silver daily 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.