Silver Price Forecast: XAG/USD retains negative bias below $30.00
- Silver price recovers some lost ground to around $29.60 in Monday’s Asian session.
- The negative picture of Silver price prevails as the price holds below the 100-day EMA with the bearish RSI indicator.
- The key support level emerges at the $29.10-$29.00 regions.
The Silver price (XAG/USD) extends the recovery to near $29.60 during the early Asian session on Monday, bolstered by the softer-than-expected US November Personal Consumption Expenditures (PCE) Price Index inflation data. However, the upside of the white metal might be limited amid the cautious approach to monetary easing next year from the Federal Reserve (Fed).
According to the daily chart, the bearish outlook of the Silver price remains in play as the price holds below the key 100-day Exponential Moving Average (EMA). Additionally, the downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline around 39.20, suggesting that further downside cannot be ruled out.
The potential support level for XAG/USD emerges in the $29.10-$29.00 zone, representing the lower limit of the Bollinger Band and psychological level. A breach of this level could expose $27.70, the low of September 9. The additional downside filter to watch is $26.45, the low of August 8.
On the upside, the crucial upside barrier for the precious metal is seen at the $30.00 level. Sustained trading above the mentioned level could pave the way to $30.60, the 100-day EMA. Further north, the next hurdle is located at $32.17, the upper boundary of the Bollinger Band.
Silver price (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.