XAGUSD Silver Prices
Silver price (XAGUSD) is up slightly as bulls attempt to retest the multi-year high of $29.77 that was reached early this month. Silver is trading at $27.50, which is higher than last week’s low of $23.37. Gold, on the other hand, is finding pressure at the psychological level of $2,000.
Silver price has been in an uptrend since bottoming at about $11 in March. This uptrend has been attributed to several factors. First, the US dollar, which it has an inverse relationship with, has been in a downward trend. The dollar index is trading at the lowest level since 2018.
Second, investors believe that the ongoing investments in green energy will lead to more demand. In Europe, governments have pledged more than $1 trillion worth of investments. In the US, recent polls show that Joe Biden is winning, which is a positive thing for silver because of his trillion-dollar investment pledge.
Third, silver price has surged because of the overall bullishness in the financial market. Recently, most assets have been in the green. For example, crude oil price has risen by more than 50% while the S&P 500 is sitting at a record high. Bitcoin, Ethereum, copper, and palladium prices have also been rising.
Fourth, the XAGUSD pair has jumped because of the low interest rates and yields in the United States because of the Federal Reserve. When yields get so low, investors tend to spread their funds in the assets such as stocks and metals.
Finally, retail traders have also helped push silver prices higher. See, during the pandemic, most sports paused as players stayed at home. As such, most people who used to bet on sports moved to day trading. Indeed, most providers of trading platforms have reported a surge in trading activity. Therefore, since most traders have limited funds, they invested in silver, which tends to be cheaper than gold.
So, is silver a good investment now?
The monthly chart below shows that silver price has been in the green for the past five consecutive months. The price is above the 50-month and 100-month exponential moving averages. It has also moved above the 50% Fibonacci retracement level.
Therefore, bulls seem to be in total control, which means that the price is likely to continue rising as bulls aim for the next resistance at $35, which is the highest level since 2012. On the flip side, a move below the 61.8% retracement at $21.66 will invalidate this trend.