Silver Price Forecast: XAG/USD bounces off 100-hour SMA; sticks to gains near $62.50
Silver (XAG/USD) attracts fresh buyers at the start of a new week and reverses a part of Friday's retracement slide from the all-time peak, around the $64.65 region.
  • Silver regains positive traction following Friday’s pullback from the all-time peak.
  • The emergence of fresh buyers near the 100-hour SMA favors the XAG/USD bulls.
  • An overbought daily RSI warrants some caution before placing fresh bullish bets.

Silver (XAG/USD) attracts fresh buyers at the start of a new week and reverses a part of Friday's retracement slide from the all-time peak, around the $64.65 region. The white metal trades above mid-$62.00s during the Asian session, up 1.25% for the day, and seems poised to prolong its recent well-established uptrend.

From a technical perspective, the XAG/USD finds decent support and bounces off the 100-hour Simple Moving Average (SMA). The subsequent move back above the $62.00 round figure validates the positive outlook. However, neutral oscillators on the 1-hour chart and a slightly overbought Relative Strength Index (RSI) on the daily chart warrant some caution for aggressive bullish traders.

This, in turn, suggests that any further move up is more likely to face some barrier near the $63.00 mark. A sustained strength beyond, however, could lift the XAG/USD towards the next relevant hurdle near the $63.80 area. Some follow-through buying beyond the $64.00 round figure will reaffirm the constructive outlook and allow bulls to challenge the record high, around the $64.65 region.

On the flip side, weakness below the $62.00 mark might still be seen as a buying opportunity near the 100-hour SMA, currently pegged near the $61.45 region. A convincing break below, however, could drag the XAG/USD below the $61.00 round figure, towards the $60.80 zone, or Friday's swing low. The latter should act as a key pivotal point, which, if broken, should pave the way for deeper losses.

Silver 1-hour 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.

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