Forex News
- Silver price may rise toward the upper ascending channel boundary around $79.30.
- The 14-day Relative Strength Index stands at 70.51, indicating overbought conditions and stretched momentum.
- The primary support lies at the nine-day EMA of $71.02.
Silver price (XAG/USD) gains more than 2% after registering a steep drop of more than 7% in the previous session, trading around $74.40 per troy ounce during the early European hours on Tuesday. Traders engaged in aggressive profit-taking after the XAG/USD pair hit a record high of $85.87 in the previous session.
The technical analysis of the daily chart timeframe suggests the price of the precious metal moves upwards within an ascending channel pattern, strengthening the bullish bias. The 14-day Relative Strength Index (RSI) stands at 70.51 (overbought), signaling stretched momentum.
The nine-day Exponential Moving Average (EMA) rises above the 50-day EMA, and the price holds well above both, framing a strong bullish trend. The short-term average has steepened in recent sessions, reinforcing upside bias.
Immediate resistance aligns at the upper boundary of the ascending channel around $79.30. A break above the channel would help the Silver price to approach the record high of $85.87, which was recorded on December 29.
A sustained push through the channel could extend gains toward new cycle highs, while failure to clear it would encourage consolidation. With moving averages trending higher and positive momentum intact, dips would attract buyers, and the trend would remain supported above the short-term average.
On the downside, support is seen at the nine-day EMA of $71.02, followed by the lower ascending channel boundary around $69.00. Further declines below this confluence support zone would open the doors for the Silver price to explore the region around the 50-day EMA at $58.73.
Silver FAQs
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.
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.
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.
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.
(The technical analysis of this story was written with the help of an AI tool.)
Here is what you need to know on Tuesday, December 30:
The action in financial markets turns subdued early Tuesday as trading conditions remain thin heading into the New Year holiday. In the second half of the day, the US economic calendar will feature housing data and the Federal Reserve will release the minutes of the December policy meeting.
US Dollar Price This Month
The table below shows the percentage change of US Dollar (USD) against listed major currencies this month. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.46% | -1.96% | -0.06% | -2.08% | -2.44% | -1.41% | -1.77% | |
| EUR | 1.46% | -0.51% | 1.41% | -0.63% | -0.99% | 0.05% | -0.32% | |
| GBP | 1.96% | 0.51% | 2.19% | -0.12% | -0.49% | 0.56% | 0.18% | |
| JPY | 0.06% | -1.41% | -2.19% | -2.05% | -2.40% | -1.36% | -1.75% | |
| CAD | 2.08% | 0.63% | 0.12% | 2.05% | -0.41% | 0.69% | 0.29% | |
| AUD | 2.44% | 0.99% | 0.49% | 2.40% | 0.41% | 1.06% | 0.67% | |
| NZD | 1.41% | -0.05% | -0.56% | 1.36% | -0.69% | -1.06% | -0.38% | |
| CHF | 1.77% | 0.32% | -0.18% | 1.75% | -0.29% | -0.67% | 0.38% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The data from the US showed on Monday that Pending Home Sales increased by 3.3% in November. Additionally, the Federal Reserve Bank of Dallas reported that the Dallas Fed Manufacturing Index edged lower to -10.9 in December from -10.4 in November. These figures failed to trigger a noticeable market reaction and the US Dollar (USD) Index held steady at around 98.00. The USD Index stays quiet in the European morning on Tuesday and continues to move sideways.
Following the record-setting rally, Gold staged a sharp correction on Monday and lost more than 4% on a daily basis. XAU/USD recovers on Tuesday but remains below $4,400.
Similarly, Silver (XAG/USD) fell about 9% on Monday after touching a all-time-high of $84 at the beginning of the week. The pair gains traction on Tuesday and climbs toward $75, rising more than 3% on the day.
EUR/USD failed to make a decisive move in either direction on Monday and closed the day virtually unchanged. The pair extends its sideways grind above 1.1750 in the European morning on Tuesday.
GBP/USD registered marginal gains on Monday but struggled to gather momentum. The pair holds steady at around 1.3500 to start the European session.
USD/JPY lost more than 0.3% on Monday as the hawkish tone seen in the Bank of Japan's Summary of Opinions supported the Japanese Yen. The pair holds steady at around 156.00 early Tuesday.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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