XAG/USD maintains its position above $30.50 near the nine-day Exponential Moving Average (EMA)
- Silver price could test the initial resistance level at the upper border of the ascending channel at $31.80.
- Short-term momentum is strong, with XAG/USD trading above both the nine- and 14-day EMAs.
- Immediate support appears to be located around the nine-day EMA at $30.47 and the 14-day EMA at $30.32.
The price of silver (XAG/USD) continues its gains for the third straight session, trading around $30.80 per ounce during Asian hours on Wednesday. Analysis of the daily chart indicates a prevailing bullish bias for the precious metal, as its price continues to rise within an ascending channel pattern.
Momentum is strong in the short term, with XAG/USD trading above the nine-day and 14-day exponential moving averages (EMAs). Additionally, the 14-day RSI is above 50, reinforcing the active bullish sentiment.
On the upside, silver price may find initial resistance around the upper border of the ascending channel at $31.80. A break above this level could boost market sentiment and push the XAG/USD pair towards a two-month high of $32.28, which was last achieved on December 9.
Immediate support lies at the nine-day EMA at $30.47, followed by the 14-day EMA at $30.32. Further support is seen around the lower border of the ascending channel at $30.00. A break below this channel could trigger the downside and put pressure on the XAG/USD pair to move into the area around the four-month low of $28.74, recorded on December 19.
XAG/USD: daily chart
Frequently asked questions about silver
Silver is a precious metal that is widely traded among investors. It has been used historically as a store of value and 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 periods of high inflation. Investors can buy physical silver, in the form of coins or bullion, or trade it through instruments such as exchange-traded funds, which track its price in international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of silver to rise due to its safe-haven status, although to a lesser extent than the price of gold. As a non-yielding asset, silver tends to rise as interest rates fall. Its movements 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, while a weak dollar is likely to push prices higher. Other factors such as investment demand, mining supplies – silver is more plentiful than gold – and recycling rates can also influence prices.
Silver is widely used in industry, especially in sectors such as electronics or solar energy, as it has one of the highest electrical conductivity of all metals – more than copper and gold. A rise in demand can cause prices to rise, while a fall tends to bring them down. Dynamics in the economies of the United States, China and India can also contribute to price fluctuations: for the United States, and especially China, its large industrial sectors use silver in various processes; In India, consumer demand for the precious metal used in jewelery also plays a major role in determining prices.
Silver prices tend to follow gold movements. When gold prices rise, silver usually follows suit, as its status as a safe haven asset is similar. The gold/silver ratio, which shows how many ounces of silver are needed to equal the value of one ounce of gold, may help determine the relative valuation between the two metals. Some investors may consider a high ratio to be an indication that silver is undervalued, or that gold is undervalued. Conversely, a low ratio may indicate that gold is undervalued compared to silver.
