Silver Price Forecast: XAG/USD retreats towards the support area right above $33.00

• Silver prices depreciate for the second consecutive day to approach support at $33.10.
• A softer US Dollar is keeping precious metals from retreating further.
• Confirmation below $33.10 would increase bearish pressure toward $32.10.

Silver Prices (XAG/USD) are trading lower for the second consecutive day on Thursday, with price action approaching a key support area at $33.10.following Wednesday’s reversal at the $34.50 area.

The lower high posted on Wednesday and price action breaking below the 4 H 50 SMA suggest that the pair might have reached the end of its bullish cycle and is ready for a corrective reversal.

On the other hand, the US Dollar is showing a moderately bearish tone over the last sessions.  This will likely keep precious metals from retreating further until the US PCE prices index and especially Friday’s NFP report are out. 

A clear break of the previous resistance, now turned support at the mentioned $33.10 area would confirm that view and add selling pressure towards the 38.6% Fibonacci retracement of the September-October bullish run, at $32.10 ahead of $31.30.

To the upside, resistance levels remain at $34.50, and the long-term high, at $34.85.
 

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.

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