Silver rose 0.19% and remained stable at $31.89 as traders anticipated key US inflation data and the Federal Reserve's next steps.
Technical analysis shows that silver prices are consolidating around $32, with $31.75 forming key support.
Potential downside risks include that if bearish pressure increases, silver prices will fall towards the $31.00 area and the 100 day moving average of $30.47.
Silver prices climbed about 0.19% on Tuesday, but failed to maintain above the $32.00 mark after hitting a three week high of $32.27 earlier this week. When Zhou Sanya City published the article, the silver price was trading at $31.89.
Speculation about a possible interest rate cut by the Federal Reserve next week continues to heat up, boosting market sentiment. The US inflation data released on Wednesday is expected to provide clearer signals for the Federal Reserve's monetary policy trajectory.
The silver price briefly rose above $32.00 before falling back, and is currently consolidating within the range of $31.75-32.00, with the 50 day moving average (SMA) at $31.75 providing key support.
The silver price has formed a "double bottom" pattern, and there is still a gap from its minimum target of $33.50. If it is clear that breaking above the resistance of $32.00 can enhance bullish momentum, paving the way for moving towards $33.00 and ultimately achieving the "double bottom" goal.
On the downside side, if the silver price falls below the 50 day moving average, bears may dominate and may fall close to the low range of $31.00. If it falls further below this level, it may point to $30.47 at the 100 simple moving average.
Silver Price Chart - Daily Chart
Silver is a precious metal with high trading volume among investors. Throughout history, silver has been used as a store of value and a medium of exchange. Although not as popular as gold, traders may turn to silver to diversify their investment portfolios, as silver has intrinsic value or serves as a potential hedge tool during periods of high inflation. Investors can purchase physical silver in the form of silver coins or silver bars, or trade through tools such as exchange traded funds (ETFs). Exchange traded funds track silver prices in the international market.
Silver prices may be influenced by various factors. Geopolitical instability or market concerns about a deep economic recession may cause silver prices to rise due to its safe haven status, although its increase may not be as significant as gold. As a zero yield asset, silver often rises as interest rates decrease. The fluctuation of silver prices also depends on the performance of the US dollar (USD), as assets are priced in US dollars (XAG/USD). A strong US dollar often suppresses the rise of silver prices, while a weak US dollar may push up silver prices. Other factors such as investment demand, mining supply (silver is much richer than gold), and recovery rates can also affect prices.
Silver is widely used in industry, especially in fields such as electronics or solar energy, because it is one of the most conductive metals among all metals, higher than copper and gold. A surge in demand may lead to an increase in silver prices, while a decrease in demand often suppresses silver prices. The dynamics of the economies of the United States, China, and India may also lead to price fluctuations. For the United States, especially China, these countries' large industrial sectors use silver in various processes; In India, consumer demand for gold jewelry also plays a key role in determining silver prices.
The price of silver often follows the trend of gold. When gold prices rise, silver prices usually also rise because their status as safe haven assets is similar. The gold to silver ratio displays the number of silver ounces required to equal the value of one ounce of gold, which may help determine the relative valuation between two metals. Some investors may believe that a high silver to gold ratio is an indicator of silver being undervalued or gold being overvalued. On the contrary, a lower gold to silver ratio may indicate that gold is undervalued relative to silver.