XAG/USD recently dropped to $31.13, reflecting nearly a 4% decline for the week. Silver struggled to maintain levels above $33.00, leading to increased selling pressure and a test of the 100-day SMA at $31.20.
Key support levels include the 50-day SMA at $30.89; a break here may expose the 200-day SMA at $30.47 and a January low of $29.70. The metal’s inability to establish a rally above $33.00 has allowed sellers to gain momentum, as indicated by the Relative Strength Index (RSI).
Geopolitical risks and market forces
Factors impacting silver prices include geopolitical instability and interest rates, with a strong US Dollar generally hindering price growth. Additionally, industrial demand, particularly from sectors like electronics and solar energy, can cause price fluctuations.
Silver typically mirrors gold price movements, as both assets serve as safe havens. The Gold/Silver ratio is often referenced to assess the relative valuation of the metals, where significant fluctuations can indicate possible undervaluation or overvaluation of either precious metal.
This drop to $31.13, marking a nearly 4% decline in a single week, shows how sentiment has swiftly shifted. Silver struggled to hold above $33.00, which triggered increased selling pressure. Now, the 100-day SMA at $31.20 has been tested, and attention turns to the next support levels.
Looking at the technical picture, the 50-day SMA at $30.89 stands out as a short-term support level. If this fails, the 200-day SMA at $30.47 and the January low of $29.70 come into play. The RSI data confirms that the inability to break past $33.00 has emboldened sellers. When momentum gathers at such key points, traders typically take note of the potential for extended declines.
Industrial demand and long-term trends
Away from charts, broader elements are influencing price action. Geopolitical risks and interest rates remain in focus. A stronger US Dollar tends to weigh on silver, making rallies hard to sustain. At the same time, industrial use plays a role. With silver’s importance in electronics and solar technology, underlying demand can create shifts that some might overlook.
A key relationship to monitor is the link between silver and gold. The two metals often move together since both are seen as safe-haven assets. One common measure is the Gold/Silver ratio, which helps compare valuations. When this ratio moves sharply in one direction, it can suggest that one of the metals may be mispriced relative to the other. Watching for moments when this relationship deviates from historical patterns can be valuable.
