Silver Price Forecast: XAG/USD bulls might await move beyond $33.00 before placing fresh bets
- Silver regains positive traction at the start of a new week following Friday’s modest slide.
- The technical setup seems tilted in favor of bulls and supports prospects for further gains.
- Any corrective pullback towards the $32.00 mark could be seen as a buying opportunity.
Silver (XAG/USD) attracts some dip-buyers at the start of a new week and touches an intraday high, around the $32.80 region during the Asian session. The white metal, however, remains below the $33.00 mark and a nearly two-week high touched last Thursday, warranting some caution for bullish traders.
From a technical perspective, the XAG/USD now seems to have found acceptance above the 61.8% Fibonacci retracement level of the recent slump from the March swing high to a fresh year-to-date low touched earlier this month. Moreover, oscillators on the daily chart have again started gaining positive traction and support prospects for a further near-term appreciating move.
However, it will still be prudent to wait for a sustained strength beyond the $33.00 mark, or the 78.6% Fibo. level, before placing fresh bullish bets. The XAG/USD might then accelerate the positive momentum towards the $33.20 area, en route to the next relevant hurdle near the $33.50-$33.55 region and the $34.00 neighborhood, or a multi-month peak touched in March.
On the flip side, Friday's swing low, around the $32.10-$32.05 region, or the 61.8% Fibo. level might continue to act as an immediate support. Any further slide could be seen as a buying opportunity and remain limited near the $31.35-$31.30 area, or the 50% Fibo. level. A convincing break below, however, might prompt technical selling and make the XAG/USD vulnerable.
The subsequent further might then drag the XAG/USD below the $31.00 round-figure mark, towards the $30.55 area, or the 38.2% Fibo. level. The downward trajectory could extend further toward the $30.00 psychological mark en route to the $29.55 region (23.6% Fibo.). The latter should act as a key pivotal point, which if broken might shift the bias in favor of bearish traders.
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.