XAG/USD bulls remain in control near two-week high around $30.00

Lina Portman3 days ago

0 3 minutes read

Silver appears to be consolidating recent gains toward a two-week high hit on Wednesday.
The technical setup favors bullish traders and supports the prospects of further upward movement.
Drops towards the $30.00 mark could be seen as a buying opportunity and remain range-bound.

Silver (XAG/USD) continued its sideways consolidation during Friday’s Asian session and is currently trading near the $30.50 area, its highest level since June 21 earlier this week. Nevertheless, the white metal remains on track for solid weekly gains as traders eagerly await the release of the US nonfarm payrolls (NFP) report before placing any new directional bets.

From a technical perspective, the recent positive bounce from below the $28.80-28.70 horizontal resistance-turned-support point and the subsequent move above the $30.00 psychological mark favors bullish traders. Moreover, XAG/USD is holding comfortably above the key daily moving averages – the 50-, 100-, and 200-day simple moving averages (SMAs). This, along with the fact that the oscillators on the daily chart are just starting to gain traction, suggests that the path of least resistance for the metal is to the upside.

Some follow-through buying beyond the weekly high, around the $30.70 region touched on Wednesday, will reaffirm the positive bias and carry XAG/USD past the $31.00 mark, towards the next relevant hurdle near the $31.50-$31.55 area. The upward trajectory could extend further and allow bulls to reclaim the $32.00 round figure before targeting the $32.50 region, or above a decade high touched in May.

On the other hand, any significant corrective decline is more likely to attract new buyers near the $30.00 round figure. This should help limit XAG/USD’s downside near the $29.75-$29.70 resistance-turned-support. The latter should serve as a pivot point, which, if broken decisively, could trigger technical selling and accelerate the decline towards the $29.10-$29.00 region. Some follow-through selling below the key $28.80-$28.70 support zone will negate the constructive outlook and shift the short-term bias in favor of bearish traders.

Silver Daily Chart

Money FAQ

Silver is a precious metal that is widely traded among investors. It has historically been used as a store of value and a medium of exchange. Although less popular than gold, traders may look to silver to diversify their investment portfolio, for its intrinsic value, or as a potential hedge during times of high inflation. Investors can purchase physical silver, in coins or bars, or trade it through instruments such as exchange-traded funds, which track its price on international markets.

Silver prices can fluctuate due to a wide range of factors. Geopolitical instability or fears of a deep recession can drive up the price of silver due to its safe haven status, although to a lesser extent than gold. As a non-yielding asset, silver tends to rise when interest rates are low. Its movements are also dependent on the behavior of the US dollar (USD), as the asset is priced in dollars (XAG/USD). A strong dollar tends to keep the price of silver at bay, while a weaker dollar is likely to push 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 and solar energy, as it has one of the highest electrical conductivities of all metals, ahead of copper and gold. Strong demand can drive prices up, while weak demand tends to drive them down. The dynamics of the US, Chinese and Indian economies can also contribute to price fluctuations: in the US and especially China, their large industrial sectors use silver in various processes; in India, consumer demand for the precious metal for jewellery also plays a key role in setting prices.

The price of silver tends to follow the price of gold. When the price of gold rises, silver generally follows suit, as they share similar safe-haven status. The gold-to-silver ratio, which indicates how many ounces of silver it takes to equal the value of one ounce of gold, can help determine the relative valuation between the two metals. Some investors may view a high ratio as an indicator that silver is undervalued or gold is overvalued. Conversely, a low ratio may suggest that gold is undervalued relative to silver.