Silver (XAG/USD) is attracting new buyers at the start of a new week and reversing part of Friday’s correction decline from the all-time high, around the $64.65 area. The white metal is trading above the mid-$62.00 levels during the Asian session, up 1.25% on the day, and appears poised to extend its recently established uptrend.
From a technical perspective, the XAG/USD pair is finding good support and bouncing off the 100 hourly simple moving average (SMA). The subsequent move back above the $62.00 round figure confirms the validity of the positive outlook. However, the neutral oscillators on the hourly chart and the overbought RSI on the daily chart require some caution for aggressive bullish traders.
This, in turn, suggests that any further move higher is likely to encounter some kind of barrier near the $63.00 level. However, continued strength after that could lift the XAG/USD pair towards the next relevant hurdle near the $63.80 area. Some subsequent buying after the round $64.00 figure will reaffirm the constructive outlook and allow the bulls to challenge the record high around the $64.65 area.
On the flip side, weakness below the $62.00 mark may still be seen as a buying opportunity near the 100 hourly simple moving average, currently pinned near the $61.45 area. However, a convincing break below could drag the XAG/USD pair below the round $61.00 figure, towards the $60.80 area, or the swing low on Friday. The latter should serve as a major pivot point, which, if broken, should set the stage for deeper losses.
Silver hour chart
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.
