XAG/USD: Weekly Plunge Nears 4% on Dollar Strength
- Silver Price Update: XAG/USD dips to $31.13 as downside pressure mounts
- Silver struggled to stay above $33.00, leading to consolidation and increased selling.
- The price is now testing the 100-day SMA at $31.20, with the 50-day SMA at $30.89 as the next crucial support level.
- If the price breaks below $30.89, we could see a move towards the 200-day SMA at $30.47 and potentially down to the January low of $29.70.
Silver wrapped up the week in the red, falling nearly 4% as traders took profits. This profit-taking came amid growing worries about a potential US recession following recent key economic data releases. Currently, XAG/USD is trading at $31.13, a slight decrease of 0.32%.
XAG/USD Price Forecast: Technical outlook
After failing to convincingly break through and hold above the $33.00 mark on the daily charts, silver hinted at a period of consolidation. A successful break above $33.00 might have fueled a rally towards $34.00. However, the XAG/USD spot price has now moved below the 100-day Simple Moving Average (SMA) at $31.20. This move opens the door for a test of the 50-day SMA support level at $30.89.
While sellers pushed prices lower, buyers managed to regain some ground, bringing the price back above $31.00. Nevertheless, the Relative Strength Index (RSI) suggests that sellers are gaining strength.
Looking ahead, the first key support level for XAG/USD is the 50-day SMA at $30.89. Should this level be breached, the next support to watch is the 200-day SMA at $30.47. If sellers successfully push through both of these levels, the trend could shift to a more bearish outlook, potentially paving the way for a challenge of the January 27 low around $29.70.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a popular precious metal among investors, with a long history as both a store of value and a form of currency. While gold often grabs the spotlight, silver offers investors portfolio diversification, intrinsic value, and a potential hedge against inflation. You can invest in physical silver, like coins and bars, or trade it through Exchange Traded Funds (ETFs) that track silver prices on global markets.
A variety of factors can influence silver prices. Geopolitical instability or fears of a significant recession can drive silver prices higher due to its safe-haven appeal, although typically less so than gold. As a non-yielding asset, silver tends to benefit from lower interest rates. Its price movements are also closely tied to the US Dollar (USD), as silver is priced in USD (XAG/USD). A stronger dollar can put downward pressure on silver prices, while a weaker dollar tends to support price increases. Other elements like investment demand, silver mining supply (which is more abundant than gold), and recycling rates also play a role in price fluctuations.
Silver has widespread industrial applications, particularly in sectors like electronics and solar energy, thanks to its exceptional electrical conductivity – even better than copper and gold. Increased industrial demand can push prices up, while a decrease can lead to price declines. Economic trends in the US, China, and India are also important for silver prices. The US and especially China, with their large industrial sectors, use silver extensively. In India, consumer demand for silver jewelry is a significant factor in price determination.
Silver prices often mirror gold’s price movements. When gold prices rise, silver typically follows as both are considered safe-haven assets. The Gold/Silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, can help assess the relative value between the two metals. A high ratio might suggest silver is undervalued or gold is overvalued. Conversely, a low ratio could indicate that gold is undervalued compared to silver.
