- Silver prices rise for the second day in a row, bringing them closer to the weekly high.
- The technical setup favors bulls and suggests that prices will continue to rise.
- Any future upward advance may encounter severe resistance near the 100-day SMA.
Silver (XAG/USD) attracted purchasing for the second day in a row on Wednesday, trading near the upper end of its weekly range, in the mid-$30.00s during the first half of the European session, up more than 0.40% for the day.
Meanwhile, technical indications on the daily chart have resumed their upward trend, bolstering the possibilities for additional price appreciation. However, any future move up may encounter severe resistance near $31.00, or the 100-day Simple Moving Average (SMA). The aforementioned barrier should serve as a critical pivot point for the XAG/USD, and if crossed convincingly, it might spark a short-covering recovery.
The continuing upward movement could continue to the next key hurdle between $31.45-$31.50, en route to the $32.00 mark and the December monthly swing high, which is about $32.30. Some follow-through buying will indicate that the corrective slide from a multi-year top reached in October 2024 has run its course, clearing the way for further rises.
On the other hand, the 200-day SMA, which is currently just over the psychological $30.00 level, should provide immediate strong support. A convincing breach below might render the XAG/USD vulnerable to retesting the weekly swing low of $29.70, which was reached on Monday. The price could fall further to $29.10-$29.00 before reaching a multi-month low of $28.75-$28.70 in December.
Why do individuals invest in silver?
Silver is a valuable metal that is often traded among investors. It has traditionally served as a store of value and a medium of exchange. Although less popular than gold, traders may use silver to diversify their investment portfolio, for intrinsic value, or as a potential hedge during periods of rising inflation. Investors can purchase real silver, such as coins or bars, or trade it through vehicles like Exchange Traded Funds, which monitor its price on international marketplaces.
What factors influence silver prices?
Silver prices fluctuate owing to a variety of variables. Geopolitical instability or fears of a major recession might cause Silver’s price to rise due to its safe-haven status, albeit to a smaller amount than Gold’s. Silver, as a yieldless asset, tends to climb in response to reduced interest rates. Its movements are also influenced by the US Dollar (USD), as the asset is priced in dollars (XAG/USD). A strong dollar tends to keep the price of silver stable, but a weaker dollar is likely to drive prices higher. Other factors that influence pricing include investment demand, mining supplies (silver is far more abundant than gold), and recycling rates.
How do silver prices react to gold price movements?
Silver prices tend to track gold’s movements. When gold prices rise, silver usually follows suit because their status as safe-haven assets is similar. The Gold/Silver ratio, which displays how many ounces of silver are required to match the value of one ounce of gold, can help assess the relative valuation of both metals. Some investors may take a high ratio to mean that Silver is undervalued or Gold is overvalued. On the contrary, a low ratio could signal that gold is undervalued in comparison to silver. Traders can use prop firm technology to better examine these ratios, acquire insights into market movements, and make data-driven portfolio optimization decisions.