Silver Price Analysis: A bearish crossover looms, sellers eye $70

XAG/USD Price Analysis: Technical Outlook

Silver’s fall below the 100-day SMA on April 2, exacerbated a move lower, initially towards $69.58, before recovering some ground, pairing some of its losses, closing the day above $70.00. After this, XAG/USD remains capped on the upside by the $74.00, registering back-to-back days of lower highs, an indication that sellers are in charge.

The Relative Strength Index (RSI) further confirms that bears are strengthening, as the index sits below its 50-neutral level.

For a bearish continuation, bears must clear the $70.00 psychological support. A breach of the latter will expose the April 2 $69.58 level, followed by the February 6 swing low at $64.10.

On the upside, key resistance emerges at the confluence of the 20- and 100-day SMAs around $75.11/14. On further strength, and a move towards the March 3 daily low turned resistance at $77.98 is on the cards.

XAG/USD Price Chart — Daily

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.