- Silver price gains marginally to near $38.00 amid caution ahead of meeting between US President Trump and Ukrainian President Zelenskiy.
- The Fed is expected to cut interest rates in September.
- Silver price wobbles near the 20-day EMA around $37.90.
Silver price (XAG/USD) edges higher to near $38.00 during the European trading session on Monday. The white metal attracts slight bids as the market sentiment is slightly cautious, with investors awaiting the meeting between United States (US) President Donald Trump and Ukrainian President Volodymyr Zelenskiy at the White House on Monday.
US Secretary of the State Marco Rubio has confirmed that a bunch of European and NATO members are joining Trump and Zelenskyy at the White House to discuss concessions proposed by Russian leader Vladimir Putin for ending war in Ukraine.
Signs of a truce between Russia and Ukraine would be unfavorable for safe-haven assets, such as Silver, which tends to perform strongly in heightened geopolitical tensions.
However, firm expectations that the Federal Reserve (Fed) will reduce interest rates in the September meeting continue to provide support to the Silver price. Lower interest rates by the Fed bode well for non-yielding assets, such as Silver.
According to the CME FedWatch tool, the probability of the Fed to cut interest rates in September is 82.6%. Traders have remained confident about Fed’s interest rate cuts in the policy meeting next month due to cooling labor market conditions.
Silver technical analysis
Silver price gains marginally to near $38.10 on Monday. The white metal demonstrates a sharp contraction in volatility due to the Descending Triangle formation on a daily timeframe. The horizontal support of the above-mentioned chart pattern is plotted from the July 7 low around $36.16, while the downward-sloping border is placed from the July 23 high near $39.53.
The asset wobbles near the 20-day Exponential Moving Average (EMA), which trades around $37.90, suggesting a sideways trend
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among market participants.
Looking down, the June 24 low of $35.28 will act as key support for the major. On the upside, the July 23 high near $39.53 will be a critical hurdle for the pair.
Silver daily chart
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.
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