Silver (XAG/USD) continues to trade below the 50-day SMA for the second straight day, indicating a negative bias in the market. Despite holding above the $31.00 mark during the Asian session, the white metal remains close to a three-week low and is vulnerable to further declines from a 12-year peak. The technical setup supports a bearish outlook, with oscillators on the daily chart showing negative traction. Traders are advised to wait for a break below $31.00 before considering a move towards the 100-day SMA at the $30.35 region.
If the downward momentum continues, the $30.00 psychological level could act as a support before the price falls towards $29.50-$29.45 area. Further downside movement may lead the XAG/USD towards the $29.00 mark and eventually the 200-day SMA around $28.70-$28.65 region. On the other hand, a breakthrough above the $32.00 hurdle could see the price climbing towards the $32.35-$32.40 supply zone. Breaking above this level may lead to a move towards $33.00, followed by resistance in the mid-$33.00s.
Silver, a precious metal with historical significance as a store of value and medium of exchange, is traded by investors for various reasons. It can be used as a diversification tool in investment portfolios, as a hedge against inflation, or for its intrinsic value. Traders can purchase physical Silver in coins or bars, or trade it through Exchange Traded Funds that track its price on international markets.
The price of Silver is influenced by multiple factors, including geopolitical tensions, economic stability, interest rates, and the strength of the US Dollar. As a safe-haven asset, Silver tends to rise during times of uncertainty or lower interest rates. Its correlation with the USD impacts its price, with a stronger Dollar generally keeping Silver prices in check. Industrial demand, mining supply, and recycling rates also play a role in determining Silver prices.
Due to its unique properties, Silver is widely used in various industries, such as electronics and solar energy, because of its high electric conductivity. Changes in demand from these sectors can affect Silver prices. Additionally, economic dynamics in major countries like the US, China, and India can impact the market, as they are significant consumers of Silver for industrial and consumer purposes. Understanding these factors can help traders anticipate price movements in the Silver market.
Silver prices often follow the trends set by Gold, as both metals are considered safe-haven assets. The Gold/Silver ratio, which compares the value of one ounce of Gold to a certain number of ounces of Silver, can provide insights into the relative valuation between the two metals. A high ratio may indicate that Silver is undervalued or Gold is overvalued, while a low ratio could suggest the opposite. Traders can use this ratio as a tool to gauge potential trading opportunities in the precious metals market.
