The XAG/USD has seen a continued decrease for the second consecutive day, hovering around $56.80 per troy ounce during European trading hours on Thursday. Analyzing the daily chart indicates that the asset’s current price is slightly under the upper limit of a descending channel, hinting at a persistent bearish trend. This suggests that sellers are effectively intervening at expected levels, preventing any significant breakouts and keeping the overall bearish outlook intact.
In the short term, the XAG/USD pair exhibits a bearish bias, as it remains below both the 9-day and 50-day exponential moving averages (EMAs). The shorter EMA sits underneath the longer EMA, and being below both adds to the sense that downward pressure still dominates. The 14-day Relative Strength Index (RSI) is just above the oversold territory at 35, indicating weak, yet not extreme, selling momentum.
The XAG/USD pair could test a major support level at $55.63, which reflects a seven-month low reached on June 24th. Should weakness continue, this could further drag the XAG/USD pair downward, potentially keeping it close to the lower boundary of the descending channel at $45.50.
On the upside, the XAG/USD faces immediate resistance at the top of the descending channel around $58.50, with the 9-day EMA positioned at $58.68. A sustained breakthrough in this resistance zone would create a more favorable outlook for silver, possibly allowing for movement toward the 50-day EMA at $65.93.
Silver is a precious metal commonly traded by investors. It’s been used historically as both a store of value and a medium of exchange. While not as popular as gold, silver can still be a choice for diversifying an investment portfolio or hedging against inflation. Investors can purchase physical silver, like coins or bars, or trade it via exchange-traded funds that track prices globally.
The price of silver often fluctuates due to various factors. Concerns over geopolitical unrest or recession may elevate silver’s price, albeit not to the same extent as gold. As a non-yielding asset, silver usually benefits when interest rates drop. Its pricing is also directly tied to the US dollar’s performance; a stronger dollar generally suppresses silver prices, whereas a weaker dollar can boost them. Other influences include investment demand, mine supply, and recycling rates, given that silver is considerably more abundant than gold.
Moreover, silver is heavily utilized in various industries, particularly electronics and solar power, due to its superior electrical conductivity, outperforming even copper and gold. Prices may surge with increased demand, but conversely, they can dip when demand wanes. Economic dynamics within the US, China, and India could lead to further price variations. The large industrial sectors in these countries consume significant amounts of silver in numerous applications, and consumer interest in precious metals for jewelry, especially in India, also influences pricing.
Ultimately, silver tends to track the movement of gold. When gold prices rise, silver, sharing a similar safe-haven appeal, often follows suit. The gold/silver ratio indicates how many ounces of silver are needed to equal the value of one ounce of gold, helping assess their relative valuations. A high ratio may suggest silver is undervalued, while a low ratio could imply that gold is undervalued compared to silver.
