Silver (XAG/USD) rose 0.5% to near $57.50 during the Asian trading session on Friday. The white metal is rising after regaining ground, following a corrective move to nearly $56.50 from an all-time high of $58.90.
The precious metal is bouncing back as traders grow more confident that the Federal Reserve (US central bank) will cut interest rates at next week’s monetary policy meeting. Lower interest rates by the Fed bode well for non-yielding assets, such as silver.
According to the CME FedWatch tool, the probability that the Fed will cut interest rates by 25 basis points to 3.50%-3.75% at its December policy meeting is 87%.
The bullish speculation of a Fed rate cut contradicts what Chairman Jerome Powell said at the monetary policy press conference in October. “A rate cut at the December meeting is not a foregone conclusion,” Powell said.
Weak labor market conditions in the United States have rarely contributed to the Fed’s dovish outlook. The private sector lost 32,000 jobs in November, while 5,000 new workers were expected to be added, the US ADP report said on Wednesday.
Meanwhile, several Federal Open Market Committee (FOMC) officials supported the need to ease monetary policy further, citing downside labor market risks.
Technical analysis of silver
XAG/USD traded at $57.51 during Asian trading hours on Friday. The 20-day Exponential Moving Average (EMA) has risen to $53.91, confirming the strong uptrend with the price comfortably above trend support. The 20-day EMA has sharpened in recent sessions, reinforcing bullish control.
The 14-day Relative Strength Index (RSI) is at 68.48 high, indicating strong momentum near the overbought zone.
The bias remains bullish while the 20-day EMA rises and continues to support pullbacks. The RSI remains strong and just below the 70 level, which could lead to a brief consolidation before the next rally. A sustained close above $57.51 will keep the upside pressure intact, while above-average declines will sustain the advance.
(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.
