Silver Price Analysis: XAG/USD surges to the highest level August, around mid-$25.00s

Silver continued scaling higher through the first half of the European session and shot to the highest level since August 2021, closer to mid- $25.00s in the last hour.

The overnight sustained break through the $24.30-$24.35 confluence barrier, comprising of 200-day SMA and a descending trend-line extending from July 2021, was seen as a fresh trigger for bullish traders. The emergence of some dip-buying on Thursday near the said resistance breakpoint now turned support, reaffirmed the constructive set-up and lifted to the XAG/USD.

The momentum pushed the white metal beyond the previous YTD high, around the $24.70 area, and the top boundary of an upward sloping channel, stretching from the $22.00 mark or the monthly low. A subsequent move beyond the $25.00 psychological mark seems to have prompted aggressive technical buying and further contributed to the strong follow-through upward trajectory.

Technical indicators, however, are flashing extremely overbought conditions on the daily and hourly charts. This, in turn, makes it prudent to wait for some near-term consolidation or modest pullback before positioning for any further appreciating move. Nevertheless, the bias seems tilted firmly in favour of the XAG/USD bulls and supports prospects for further gains.

On the flip side, any meaningful decline might find decent support near the aforementioned ascending channel resistance breakpoint, currently around the $25.00 mark. A further downfall is more likely to attract fresh buying and remain limited near the $24.70 area. The next relevant support is pegged near the $24.45 region, which should act as a near-term base for the XAG/USD.

Silver daily chart

Technical levels to watch