- Silver maintains its near-term bearish trend intact, with $35.50 support in danger.
- US Dollar’s weakness is keeping the precious metal from retreating further.
- XAG/USD: Below $35.50, the targets are $34.10 and $33.40.
Silver (XAG/USD) keeps trading back and forth without a clear bias, with technical indicators pointing to an increasing bearish momentum, and a key support area at $35.50, at a short distance.
Markets maintain the positive inertia from the fragile ceasefire in the Middle East. A moderate risk appetite keeps weighing on safe-haven assets, such as precious metals, with a broad-based US Dollar weakness keeping the pair from a deeper correction, at least for now.
Technical Analysis: XAG/USD remains supported by the neckline of a H&S formation
From a technical perspective, four-hour charts show a trend of lower highs and lower lows from Monday’s top, at $36.40, with the Relative Strength Index (RSI) treading lower, well within bearish levels.
The Doji candles on the daily chart indicate a hesitant market, and recent price action highlights a potential Head & Shoulders pattern, a common sign of an impending trend shift.
A break below the H&S neckline, at $35.50, would increase pressure towards $34.10 (June 4 low). The measured target of the H&S pattern is at $33.43.
On the upside, immediate resistance is at the mentioned $36.40 (June 23 high) ahead of the June 19 high at $36.82.
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.