Silver Price Forecast: XAG/USD rebound stalls above $33.00, keeps moving in range
- Silver's rebound loses steam amid higher appetite for risk and a firmer US Dollar.
- Upbeat US Consumer Confidence data has offset investors’ concerns about debt.
- XAG/USD is correcting lower from $33.70, with support at $32.89 holding bears for now.
Silver prices (XAG/USD) are posting moderate losses on Wednesday, weighed by the upbeat market sentiment, which is undermining demand for safe assets, and a firmer US Dollar.
The Greenback is trading higher across the board, on the back of easing trade tensions, after Trump's decision to delay tariffs to Europe, and the upbeat Consumer Sentiment figures seen on Tuesday.
The risk-on mood offset the weak US Durable Goods Orders data and pushed debt concerns to the back seat, at least for now. The highlight today is the release of the minutes of the Fed’s May meeting that will provide further clues about the bank’s next steps.
Technical analysis: XAG/USD is in a bearish correction from $33.70
XAU USD was capped at the top of the last two months' trading range, at $33.70, and is now correcting lower. Last week’s lower high confirms the immediate bearish trend, although the support at the $32.80 area seems to be a strong one.
The pair is struggling to find acceptance above $33.35, and remains moving within Tuesday’s range. Resistance at $33.50 (May 23, 26, and 27 highs) is likely to hold bulls ahead of the mentioned horizontal channel’s top at $33.70.
On the downside, a bearish reaction below $32.80 would bring $32.15 into focus.
XAG/USD 4-Hour Chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a 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 high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves 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, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.