Silver Price Prediction: XAG/USD bulls might await sustained move beyond $30.00 mark

• Silver attracts some dip-buying following the overnight pullback from a one-month peak.

• The technical setup seems tilted in favor of bulls and supports prospects for further gains.

• Dips towards the $29.20 confluence hurdle breakpoint could be seen as a buying opportunity.

Silver (XAG/USD) regains positive traction during the Asian session on Wednesday and stalls the overnight modest pullback from the vicinity of the $30.00 psychological mark or over a one-month high. The white metal currently trades around mid-$29.00s and seems poised to prolong its recent goodish recovery from the lowest level since May touched earlier this month. 

From a technical perspective, the emergence of dip-buying near the $29.20 confluence hurdle breakpoint– comprising the 50-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the July-August slide – validates the positive outlook. Moreover, oscillators on the daily chart have been gaining positive traction and are far from being in the overbought zone. This, in turn, suggests that the path of least resistance for the XAG/USD is to the upside. 

That said, the overnight failure near the $30.00 round figure makes it prudent to wait for some follow-through buying before positioning for a further near-term appreciating move. The XAG/USD might then climb to the $30.55-$30.60 area, or the 78.6% Fibo. level. The momentum could extend beyond the $31.00 mark, towards the $31.30-$31.40 supply zone en route to the July swing high, around the $31.75 region, the $32.00 level and the $32.50 area, or the YTD peak.

On the flip side, the $29.20 area might continue to act as an immediate strong support ahead of the $29.00 round-figure mark. A convincing break below the latter could make the XAG/USD vulnerable to accelerate the slide towards the $28.55 region, or the 38.2% Fibo. level, before eventually dropping to the $28.00 round figure. Failure to defend the said support levels might expose the $27.25 support and the next relevant support near the $27.00 mark.

Silver daily chart

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.