Silver (XAG/USD) price collapses by 7.90% on Friday as US Treasury yields skyrocket amid investor fears of a second round of inflation, fueling speculation that major central banks could raise interest rates in the near term. The XAG/USD pair trades at $76.88 after reaching a high of $83.87.
XAG/USD Price Forecast: Technical outlook
In the last two trading days, the white metal tumbled nearly 12% after peaking shy of $90.00, as sellers stepped in aggressively, pushing Silver spot prices below $77.00.
From a momentum standpoint, the Relative Strength Index (RSI) shifted bearishly a day ago, suggesting sellers are gaining traction. Therefore, the path of least resistance is downwards.
For a bearish continuation, if XAG/USD clears the $75.00 psychological mark, it opens the door to challenge the May 4 swing low of $72.21. Once hurdled, the next stop would be the April 29 daily low of $70.86, ahead of the $70.00 mark.
If buyers want to regain control, they must reclaim the $77.00 level, which is above the 50-day Simple Moving Average (SMA) at $76.98. Above this area, the next resistance level would be the 20-day SMA at $77.79, ahead of the 100-day SMA at $80.94.
XAG/USD Price Chart – Daily
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.
