Silver (XAG/USD) is attracting some sellers after the Asian session rose to the $51.85 area and is moving away from the weekly high, which it touched the previous day. The white metal fell back below the $51.00 level in the past hour, although the technical setup warrants some caution for bearish traders.
The XAG/USD pair found good support and rebounded from the 100-period simple moving average (SMA) earlier this week. The aforementioned support is currently located near the $50.00 psychological level and should serve as a major pivot point for short-term traders. A convincing break below would pave the way for a resumption of the bounce slide from the nearly four-week high, which was touched last Thursday.
The XAG/USD pair may then accelerate from decline towards a retest of the weekly swing low, around the $49.35 area touched on Tuesday. Some subsequent selling, leading to a subsequent break below the $49.00 level, could leave the commodity vulnerable and reveal the next relevant support near the mid-$48.00 areas. The decline could extend to the round $48.00 figure on its way to the $47.15-$47.10 area.
On the flip side, the overnight swing high, around the $52.45 region, now appears to be acting as an immediate hurdle, which, if cleared, will be seen as a new catalyst for an XAG/USD rally. The white metal may then aim to reclaim the round $53.00 figure before rising further towards the $53.50-$53.55 area on its way to the $54.00 mark and the monthly peak, around the $54.35-$54.40 area, which it touched last week.
Silver 4-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.
