Silver Price Forecasts: XAG/USD looks for direction above key support at $65.50 area
- XAG/USD is trading in a narrow range between Monday's high, at $67.47, and key support at $65.50.
- Precious metals are looking for direction as investors await key US releases for further insight about the Fed's monetary policy.
- Silver is holding above an ascending trendline support from late July lows.
Silver (XAG/USD) remains practically flat on Tuesday, holding most of Friday’s losses and trading at $66.60 at the time of writing, with price action contained within the previous day’s range. The broader bullish trend from late July lows remains in play, but failure to breach Monday’s high, at $67.47, might increase pressure on a key support area around $65.50.
Precious metals are looking for direction in a calm trading session on Tuesday, with US Dollar volatility subdued. The impulse from the US Federal Reserve Chairman Kevin Warsh’s hawkish comments on Friday has worn off, and investors await key employment data due later this week for a better assessment of the outcome of September’s monetary policy decision.
Technical Analysis: Holding above the ascending trendline support
XAG/USD trades at $66.47, following a sharp reversal from the $71.00 area last week. The near-term structure remains positive, but Friday's bearish engulfing candle is an important bearish sign, and a clear break of the $65.50 area where trendline support crosses Monday's low would confirm a deeper reversal.
Momentum indicators in the daily chart offer a mixed picture, with the Relative Strength Index (14) mildly positive above the 50 level, whereas the Moving Average Convergence Divergence (MACD) has turned negative, reinforcing the idea of a waning bullish phase and increasing risk of a corrective pullback.
Bulls should break Monday's high at $67.47 to shift the focus again towards the resistance area between the mid-June highs, at $71.75 and the 200-day Simple Moving Average (SMA) at $72.64. On the downside, below the mentioned $65.50 area, bears might be attracted by the August 19 low, at the $62.20 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Why do people invest in Silver?
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.
Which factors influence Silver prices?
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.
How does industrial demand affect Silver 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.
How do Silver prices react to Gold’s moves?
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.