Silver Price Forecast: XAG stalls as yields cap recovery
Silver price advanced by some 0.39% on Friday, capped by rising US yields, even though US data was softer than expected. XAG/USD trades at $64.70, after bouncing off daily lows of $63.51.
On Friday, the silver price managed to increase by 0.39%, however, this rise was constrained by an uptick in US yields despite US data presenting softer than anticipated figures. As of the current trade, XAG/USD is valued at $64.70, having rebounded from a daily low of $63.51. Despite indications of a potential bottom near the $54.70 level, which is close to the yearly low of $54.77, silver remains under a downward pressure.
The Relative Strength Index (RSI) suggests a bullish momentum in the short term, but from a market structure standpoint, the outlook is bearish. For a bullish trend to continue, the first resistance level for XAG/USD is the 100-day Simple Moving Average (SMA) at $68.76. Above this level, the initial major resistance point is the 200-day SMA at 71.64, followed by the $72.00 mark.
On the downside, if silver falls below its July 6 high of $63.28, the subsequent support would be the 50-day SMA at $61.35. The next point of support would be the August 3 low of $56.57, leading to the yearly low of $54.77. Silver is a widely traded precious metal among investors, historically utilized as a store of value and medium of exchange.
Although it is not as popular as gold, investors may consider silver for portfolio diversification due to its intrinsic value or its potential role as a hedge during high-inflation periods. Aside from gold, silver can be purchased in physical form, such as coins or bars, or traded via financial tools like Exchange Traded Funds, which mirror its price on international markets.
Silver prices fluctuate due to a multitude of factors. Geopolitical tensions or concerns of a severe recession can cause silver prices to surge due to its safe-haven status, albeit to a lesser extent than gold. As a yield-free asset, silver tends to rise when interest rates are low. Its movements are also influenced by the US Dollar (USD), as it is priced in dollars (XAG/USD).
A robust dollar tends to keep silver prices in check, while a weaker dollar is likely to boost silver prices. Additional factors such as investment demand, mining supply – silver is significantly more abundant than gold – and recycling rates can also impact prices. Silver's industrial applications, particularly in sectors like electronics or solar energy, play a significant role due to its high electrical conductivity - higher than copper and gold.
Increased demand can raise prices, while a decline often results in lower prices. Silver prices generally follow gold's movements. When gold prices rise, silver prices typically follow suit, as both are considered safe-haven assets. The Gold/Silver ratio, indicating how many ounces of silver are needed to match the value of one ounce of gold, can assist in determining the relative valuation of both metals.
Some investors may view a high ratio as an indication that silver is undervalued or gold is overvalued. Conversely, a low ratio might suggest that gold is undervalued relative to silver.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
