Silver Price Forecast: Defending this key support is critical for XAG/USD bulls

  • Silver price rebounds from 200-DMA but 50% Fib level caps the upside.
  • Downside bias remains intact amid bearish RSI.  
  • 61.8% Fibo support holds the key for silver price.

Silver price (XAU/USD) witnessed the steepest drop in nearly five months on Thursday, extending its bearish momentum into the fifth straight session. The white metal hit a seven-week low at $25.77 after the hawkish surprise delivered by Fed Chair Jerome and Co, on Wednesday lifted the odds of monetary normalization sooner than previously thought. The Treasury yields surged on the Fed’s hawkishness and boosted the US dollar’s demand across the board. Higher rates dull the appeal of yieldless gold and silver. However, the upbeat US Jobless Claims eased fears over the world’s most powerful central bank’s hawkish move, which helped silver price recover some ground, although the bright metal finished the day below the $26 mark.

On the final trading day of the week, silver price has paused its downtrend, attempting a tepid bounce amid a pullback in the greenback. The bulls still remain cautious amid a steady recovery in the US rates. If the US dollar retreat extends, silver’s recovery momentum could gain traction. It’s worth noting that higher inflation along with a potential lift-off by the Fed usually points to a strengthening US economy, which implies improved prospects for industrial metals such as silver. However, any recovery is likely to remain short-lived in the near term.

Silver Price Chart - Technical outlook

Silver: Daily chart

As observed on silver’s daily chart, the sell-off just stalled ahead of the critical support near $25.70, which is the confluence of the 200-Daily Moving Average (DMA) and the 61.8% Fibonacci Retracement of the rally from March lows of $23.78 to May highs of $28.75.

At the time of writing, the price is battling resistance at $26.25, which is the 50% Fibonacci levels of the same advance.

A sustained break above that level is needed to extend the corrective upside, above which the horizontal 100-DMA at $26.63 could be probed.

The next relevant barrier is seen at the $27 round number.

The Relative Strength Index (RSI) has rebounded from the lower levels but remains below 50.00, suggesting that the bearish bias still holds intact.   

Alternatively, if the abovementioned critical support around $25.75 is taken out convincingly, a drop towards the horizontal (dashed) trendline support at $24.65 will be likely on the cards.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD battles with 1.1700 as the market mood turns sour

Poor German data and renewed concerns about a default of the Chinese Evergrande property giant undermined investors’ sentiment, pushing them into the dollar’s safety.


GBP/USD accelerates its slump, trades around 1.3650

GBP/USD is under strong selling pressure, trimming most of its post-BOE gains. Concerns about the global financial health and slow moves towards tapering weigh on markets.


XAU/USD hangs near multi-week lows, around $1,745 ahead of Powell

Gold struggled to capitalize on its attempted intraday recovery move. Hawkish Fed/BoE, rising bond yields acted as a headwind for the metal. Resurgent USD demand exerted additional pressure on the commodity.

Gold News

PBoC imposes ban on crypto trading as it fosters ‘illegal financial activity’

PBoC bans crypto trading activities and a plethora of associated services, labeling it “illegal.” Overseas cryptocurrency exchanges providing services to Chinese residents will be investigated in accordance with the law. 

Read more

Evergrande, VIX and yields make for choppy day ahead

Equity markets remain focused on Evergrande as rumours of a possible default on overseas debt swirl. The market appears to be on the hunt for negative news, which leads us to conclude that stocks are going lower in the short term.

Read more