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13 Dec 2024
Silver Price Forecast: XAG/USD falls to near $31.00 after breaking below ascending channel
- Silver price extends its losses amid a momentum shift to bearish from bullish bias.
- The emergence of the bearish bias is confirmed as the 14-day RSI breaks below the 50 mark.
- XAG/USD may find immediate barriers at the 14-day EMA at $31.17, aligned with the nine-day EMA at $31.22.
Silver price (XAG/USD) extends its losses for the second session, trading around $30.90 per troy ounce during the Asian hours on Friday. The daily chart analysis indicates a momentum shift to bearish from bullish bias as the pair has broken below the ascending channel pattern.
The XAG/USD pair moves below the nine- and 14-day Exponential Moving Averages (EMA), indicating an ongoing bearish outlook and signaling to weaken short-term price momentum. This points to increasing selling interest and raises the likelihood of further price depreciation.
Additionally, the 14-day Relative Strength Index (RSI) falls below the 50 mark, further confirming the emergence of the bearish bias.
On the downside, the XAG/USD pair could navigate the region around the psychological level of $30.00, followed by a “throwback support” level at its three-month low of $29.65, which was recorded on November 28.
The immediate barriers appear at the 14-day EMA at $31.18, followed by the nine-day EMA at $31.22. A break above these levels could cause the bullish bias to re-emerge and help the Silver price to return to the ascending channel pattern.
A return to the channel would support the XAG/USD pair to retest its five-week high of $32.28, followed by the ascending channel’s upper boundary at $33.00.
XAG/USD: 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.