The price of silver (XAG/USD) rose to a new record high near $57.60 during Asian trading hours on Monday. Silver rose after a report of a COMEX outage due to what exchange operator CME calls a “cooling system failure.”
Moreover, the possibility of an interest rate cut by the US Federal Reserve at its December policy meeting could support the white metal in the near term. Lower interest rates can reduce the opportunity cost of holding silver, supporting the non-yielding precious metal.
Technical analysis:
On the daily chart, XAG/USD is trading at $57.49. The price extends well above the 100-day moving average at $45.60, confirming the strong uptrend. The average slopes upward, reinforcing the uptrend and providing a cushion in case of setbacks. The RSI at 73.47 is in overbought territory, indicating extended momentum that may precede a consolidation. Initial pullback support is located at the middle Bollinger band near $51.29.
The price is above the upper Bollinger band at $56.37, indicating strong upward pressure and an extended advance. The bands have widened, reflecting higher volatility and momentum. A daily close below the upper band would open the way towards the middle band, while deeper losses could target the 100-day EMA at $45.60. Despite the strong trend, overbought signals indicate that any upside extension could be tempered by a period of digestion before the next wave higher.
(Technical analysis of this story was written with the help of an artificial intelligence tool)
Frequently asked questions about silver
Silver is a precious metal that is widely traded among investors. It has been used historically as a store of value and 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 periods of high inflation. Investors can buy physical silver, in the form of coins or bullion, or trade it through instruments such as exchange-traded funds, which track its price in international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of silver to rise due to its safe-haven status, although to a lesser extent than the price of gold. As a non-yielding asset, silver tends to rise as interest rates fall. Its movements 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, while a weak dollar is likely to push prices higher. Other factors such as investment demand, mining supplies – silver is more plentiful than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in sectors such as electronics or solar energy, as it has one of the highest electrical conductivity of all metals – more than copper and gold. A rise in demand can cause prices to rise, while a fall tends to bring them down. Dynamics in the economies of the United States, China and India can also contribute to price fluctuations: for the United States, and especially China, its large industrial sectors use silver in various processes; In India, consumer demand for the precious metal used in jewelery also plays a major role in determining prices.
Silver prices tend to follow gold movements. When gold prices rise, silver usually follows suit, as its status as a safe haven asset is similar. The gold/silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, may help determine the relative valuation between the two metals. Some investors may consider a high ratio to be an indication that silver is undervalued, or that gold is undervalued. Conversely, a low ratio may indicate that gold is undervalued compared to silver.
