The forex markets started 2019 with unpredictable conditions across the board, from majors to exotics. Volatility is circling the globe, and traders are cautiously weathering the storm with a hopeful eye on the horizon. For traders wanting to see significant market movements over the coming year, the hardest part will be finding a forex pair that isn’t going nuclear because of politics. Fortunately, when in troubled times, there is always one type of trading instrument that cautious traders can turn to: metals! And this year, forecasts for XAGUSD suggest that the silver price might well make XAG the safe haven currency of the year.
Silver prices haven’t been doing very well over the last six years. At the end of 2012, XAGUSD was enjoying a high of 48.700 per ounce, but then a nosedive began that would last for 3 years. When the major downward movement finally ended, prices were just 14.100.
Since then, silver traders have not seen any significant moves that would suggest a return to previous highs. This brings us to that old phrase that traders love so much: what goes up must come down, and vise versa. At first glance, some might say that silver prices are overdue a rise, but not everyone agrees. The bulls and the bears are in conflict about the silver price in 2019, which is probably why there hasn’t been any major change in trading volumes throughout Q1.
The bears are avoiding XAG right now, insisting that both short-term and long-term price movements present a steady downward trend. Trading the trend is a tried and tested method of choosing which direction to go, so unless there is a significant reason for the trend to flip, traders rarely go against the flow.
When a coming fundamental event is strong enough to create positive sentiment, it can motivate massive price action, and the influx in trading volumes that follows goes on to create the bounce that was originally forecasted. That’s the norm for most pairs, whether metals or forex.
But charts show that the silver price is famous for hitting historical highs and lows both with or without fundamental influence. Therefore, trading the silver trend can be a catastrophic strategy if the timing is off. This price uncertainty seems to have created a deadlock among traders, and XAG prices are floating in limbo waiting for something to tip the scale.
One great indicator of coming silver price shifts has always been gold. Gold is presently in a long overdue upward trend, and traders who turned to metals in Q4 of 2018 are enjoying an amazing start to 2019. As always, there are no guarantees. If sentiment on gold continues to be positive in Q2, the likelihood of XAG breaking out will increase, which is why the bulls are getting so excited.
Fortunately, metals tend to have lower volatility than forex, and movements take time to gain momentum. If you already have a trading account, you should be able to react in time to take full advantage of the next shift. In a world where bank interest rates are at all-time lows, having a trading account at the ready for such trading opportunities makes all the difference.
Planning to keep an eye on the silver price?
Not sure how to get started? Check out this step-by-step guide