Silver Drops Toward 2-Month Low on Bearish Technicals

Key Moments

Silver Holds Near Eight-Week Low as Recovery Stalls

Silver (XAG/USD) comes under renewed selling pressure near the $61.75 region during the Asian session on Wednesday, halting a modest rebound from the $60.30 area, which marked the lowest print since August 5. The metal is currently changing hands close to the $61.00 level, showing a loss of around 0.70% on the day, as market participants turn their attention to upcoming U.S. macro releases – the Personal Consumption Expenditures (PCE) Price Index and the final reading of U.S. Q2 GDP – for the next directional cue.

Technical Picture: Bias Remains Tilted to the Downside

From a short-term technical standpoint, XAG/USD continues to exhibit a bearish tone while it trades beneath the horizontal support break at $62.20-$62.25 and below the 200-period Exponential Moving Average (EMA) on the 4-hour chart, positioned at $64.28. The Moving Average Convergence Divergence (MACD) indicator has just nudged into slightly positive territory, suggesting only a tentative attempt at recovery. At the same time, the Relative Strength Index (RSI) hovers near 35, signaling weak momentum and underscoring that selling pressure remains dominant despite the recent rebound from levels under $61.00.

Resistance Levels: Limited Upside Potential

The current setup implies that any near-term rallies are likely to be shallow. Initial resistance is seen around the $61.80-$61.85 band, followed by the $62.00 figure and then the $62.20-$62.25 zone, which has turned from support into a barrier. This latter area is expected to act as an important pivot. A sustained move above it would be required to clear a path toward the 4-hour 200-period EMA at $64.28. Bulls would need to reestablish control above that moving average to relieve the existing bearish structure and create scope for a more meaningful push to the upside.

Support Levels: Focus on $60.00 and Below

On the downside, the recent lows near $60.30 represent the first area where dip-buying interest has been apparent. Below that, the $60.00 psychological level is the next significant reference point. A decisive break of $60.00 would likely open the door to a decline toward the $59.40-$59.35 support band, ahead of a potential slide toward the $59.00 handle. Should the downward move extend further, sellers may then look to test the August low in the $56.60-$56.55 region, with some interim support anticipated around the $57.00 round number.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Understanding Silver as an Investment

Role of Silver in Portfolios

Silver is a widely traded precious metal and has long served as both a store of value and a medium of exchange. While it tends to attract less attention than Gold, investors may include Silver in their holdings for diversification, its intrinsic value, or as a possible hedge during periods of elevated inflation. Market participants can gain exposure through physical holdings – such as coins and bars – or via instruments like Exchange Traded Funds that track Silver prices in global markets.

Key Drivers of Silver Prices

Silver prices respond to a broad range of influences. Episodes of geopolitical tension or concerns about a severe economic downturn can support Silver because of its safe-haven appeal, though typically to a lesser extent than Gold. As a non-yielding asset, Silver often benefits when interest rates move lower. Its pricing is also closely linked to the performance of the U.S. Dollar, since Silver is quoted in dollars as XAG/USD. A firm Dollar generally weighs on Silver, while a weaker Dollar can provide a tailwind. Additional determinants include investment demand, mining output – with Silver being far more plentiful than Gold – and recycling activity.

Impact of Industrial and Jewelry Demand

Industrial usage is a crucial component of Silver demand. The metal is extensively employed in industries such as electronics and solar energy because it offers exceptionally high electrical conductivity, surpassing that of Copper and Gold. A pickup in industrial demand can support higher prices, whereas a slowdown typically exerts downward pressure. Economic conditions in the U.S., China, and India contribute to these dynamics. The U.S. and especially China have large industrial bases that consume Silver in various manufacturing processes, while in India, demand for Silver jewelry plays an important role in price formation.

Relationship Between Silver and Gold

Silver often tracks moves in Gold. When Gold prices climb, Silver usually advances as well, reflecting their shared status as safe-haven assets. The Gold/Silver ratio – which measures how many ounces of Silver are needed to match the value of one ounce of Gold – is sometimes used to gauge their relative valuation. A high ratio can be interpreted by some investors as a sign that Silver may be undervalued or Gold overvalued, whereas a low ratio can suggest the opposite, indicating that Gold might be undervalued compared with Silver.