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30 Jan 2025
Silver Price Forecast: XAG/USD looks to build on momentum beyond 100-day SMA/$31.00
- Silver attracts buyers for the third straight day and climbs to over a one-month top.
- The technical setup favors bulls and supports prospects for further appreciation.
- Any corrective pullback could be seen as a buying opportunity and remain limited.
Silver (XAG/USD) gains positive traction for the third consecutive day and climbs to its highest level since December 13 during the first half of the European session. The white metal currently trades around the $31.00 mark, with bulls now awaiting a move beyond the 100-day Simple Moving Average (SMA) before placing fresh bets.
Meanwhile, technical indicators on the daily chart have just started gaining positive traction and support prospects for an eventual breakout through the said barrier. The subsequent short-covering rally has the potential to lift the XAG/USD towards the next relevant hurdle near the $31.45-$31.50 area en route to the $32.00 mark and the December monthly swing high, around the $32.30 region.
Some follow-through buying will suggest that the corrective decline from a multi-year peak touched in October 2024 has run its course and pave the way for additional gains. The XAG/USD might then climb further towards the $32.75-$32.80 region before aiming to reclaim the $33.00 mark for the first time since early November.
On the flip side, the $30.70-$30.65 area now seems to protect the immediate downside. Any further pullback could be seen as a buying opportunity and remain limited near the 200-day SMA, currently pegged just ahead of the $30.00 psychological mark. A convincing break below the latter, however, could make the XAG/USD vulnerable to retesting the weekly swing low, around the $29.70 region touched on Monday.
Silver daily 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.