Silver Price Forecast: XAG/USD holds gains at multi-year highs above $48.30
Silver (XAG/USD) appreciates for the second consecutive day on Monday, to reach fresh 4-year highs at $48.75, with downside attempts contained so far above last week's highs at $48.30. 
  • Silver rallies for the second consecutive day and hits fresh four-year highs, past $48'70
  • US shutdown, hopes of a loosening fiscal policy in Japan, and political uncertainty in France boost precious metals.
  • XAG/USD is bullish, but a bearish divergence suggests that the trend might be losing steam.

Silver (XAG/USD) appreciates for the second consecutive day on Monday, to reach fresh 4-year highs at $48.75, with downside attempts contained so far above last week's highs at $48.30.
 

Precious metals are thriving on Monday as a combination of a US government shutdown, which looks to be an extended one, expectations of a looser monetary policy in Japan, and the growing political uncertainty in France, have prompted investors to find alternative assets.

Technical analysis: Key resistance lies right above $49.00

XAG/USD Chart

From a technical perspective, the pair remains trading higher within an ascending channel from id September lows. The 4-Hour RSI, however, is showing some bearish divergence, which should act as a warning for buyers.

Bulls are likely to be challenged at $ 49.24-$49.30, where the 161.8% of the September 17 to September 24 range meets the top of the ascending channel. Further up, the $50.00 psychological level emerges as the next bullish target..

Downside attempts are being contained above $48.30 (September 3 high) for now. Below here, the 47.60 area (Intra-day support and trendline support, at $46.90 would come into focus.

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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