XAGUSD Analysis

Introduction

XAG/USD represents the price of silver measured against the US Dollar. As a precious metal, silver is considered a store of value, like gold, and is often used as a hedge against inflation and currency devaluation. The price of silver is influenced by the same factors that affect gold, including global economic uncertainty, inflation expectations, and interest rate differentials. Silver also has industrial demand, particularly in electronics and solar energy, which can make its price more volatile than gold. Key drivers of silver prices include global economic growth, interest rate changes (especially from the Federal Reserve), and the overall strength of the US Dollar.

Fundamentals and Interest Rates

The policy is with the current Interest rate 0%. Latest change was 0%.
On that side the Federal Reserve policy is Dovish and (FED) has set its interest rate to 4.5% by latest change, Dec 18, 2024 (-25bp).
(FED) Higher interest rates generally lead to higher returns on investments denominated in USD. This tends to attract foreign capital into USD assets. and for the USD is Weak Bearish.
Ziwox considering Weak Bearish bias for this asset and we expect prices to decline in the long-term. and Fundamental Score for USD is -1. So, base on the Fundamental Score, we predict mid-term upside price movement.

Market Overview & Performance

In the current trading session, "Tokyo & London", Market risk sentiment is Mix. The Yen and Switzerland Frank recorded the strongest performance, while the Australian dollar and United States Dollar are weakest so far.

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a 0.16% increase against us dollar.
Euro "EUR", performance has been 0.11% up so far
Pond "GBP", performance has been 0.02% up as of now
New Zealand dollar "NZD", has risen by 0.06%
Japanese YEN "JPY", experienced 0.19% rise
Swiss franc "CHF", experienced 0.17% rise so far
Canadian dollar "CAD", has gained 0.11%

Market Sentiment and Positioning

XAG COT (Commitments of Traders):

Institutions Net Position on >Silver is 47754 included 67944 long, 20190 short and -1498 position changed from last week.
So they mainly have a bullish view on this asset and bought XAG for higher prices in long-term.
Last week -1498 repositioning Indicates closing positions, short-term profit-taking, or a general pessimism about prices.

USD COT (Commitments of Traders):

Institutions Net Position on >U.S. Dollar Index is -615 included 15539 long, 16154 short and 493 position changed from last week.
So they mainly have a bearish view on this asset and sold USD for lower prices in long-term.
Last week 493 repositioning Indicates closed positions and short-term profit-taking.

Retail Traders:

Crowd traders or Retail traders are bullish on the XAGUSD with 52% 48% ratio. 1015 long pos and 702 short position.
We generally adopt a contrarian approach towards crowd sentiment and we give probability XAGUSD prices may decrease.

Technical Levels and Support/Resistance

The XAGUSD pair is approaching a critical technical support level near 31.565.
Technical trend is BUY, If the pair continues to weaken, this support could become a good area to enter a long positions.
On the upside, there is key resistance near 32.771. Technically, A break above this resistance could signal a shift in momentum, but need to get a confirmation in this area due to the reversal or correction potential.