Silver recently took a hit, sinking below its 100- and 200-day simple moving averages (SMAs), hinting at strong bearish pressures as tensions intensified with US-China tariff exchanges. The Relative Strength Index (RSI) slipped into oversold territory, yet the selling wave might persist, dragging prices towards $28.74 and possibly $27.71 if it fails to hold at $29. However, should it bounce back above $30, there’s potential for buyers to revisit the 200-day SMA at $30.86 and challenge key resistance near $31.
On Friday, Silver saw a sharp drop as market unrest rolled into its third day, triggered by US President Donald Trump’s new reciprocal tariffs. In response, China retaliated, sparking concerns over a looming global economic slowdown. As a result, the XAG/USD slid to $29.55, a plunge exceeding 7%.
From a technical perspective, the decline pushed Silver under both the 100- and 200-day SMAs—which stood as major support levels around $31.39 and $30.86, respectively—highlighting a pronounced sell-off. Despite the RSI indicating an oversell, the pace of the decline could mean further retrenchments for XAG/USD. Should it dip below $29.00, it may reveal further vulnerabilities towards the December 19 low of $28.74, and beyond that, the September 3 low of $27.71. Conversely, a rally past $30 might encourage buyers to test the waters at the 200-day SMA near $30.86, with sights set towards the $31 mark.
When considering Silver’s price dynamics, several factors are at play. Though not quite as popular as Gold, Silver still holds great allure for investors looking to diversify portfolios or hedge against inflation. It can be purchased physically or traded via Exchange Traded Funds (ETFs) that track its market price.
The movement in Silver prices stems from a variety of influences. Geopolitical tensions or economic downturns could boost its value, given its status as a safe-haven asset—though not as pronounced as Gold’s. Interest rates have an effect; Silver’s yieldless nature means lower rates often buoy its price. Currency fluctuations, particularly with the US Dollar in which Silver prices are denominated, also play a significant part. A strong dollar can suppress prices, while a weak one can boost them. Supply and demand dynamics, including mining output and recycling rates, similarly affect price trends.
Industrially, Silver’s electrical conductivity—surpassing both Copper and Gold—makes it a key component in electronics and solar industries. Increased demand in these sectors can push prices upwards, while decreases apply downward pressure. Economic shifts in major markets like the US, China, and India can trigger price changes, given their industrial demands and consumer habits, respectively.
In relation to Gold, Silver prices often mirror movements, thanks to their commonality as safe-haven assets. The Gold/Silver ratio offers a comparative gauge between the two, suggesting relative evaluations for traders. A high ratio could indicate Silver is a bargain or that Gold is overpriced, while a low ratio might imply the opposite.
