Silver Price Forecast: XAG/USD bounces at the 78.6% Fibo and clings to the $24.80s area

Silver (XAG/USD), even though it remains trading with losses, bounced off the 78.6% Fibonacci retracement, a solid buying zone, and pushed XAG/USD shy of the $25.00 area, which also confluences with the 61.8% golden ratio. At the time of writing, XAG/USD is trading at $24.87, down some 0.67%.

Geopolitical jitters and FOMC monetary policy meeting  boost the greenback

Following XAG/USD’s last week rally, which witnessed a jump from $25.00 to YTD highs around $26.94, it was expected that silver would register a mean reversion move that could push the white metal towards a renewed re-test of 2022 highs. Meanwhile, Russia-Ukraine talks, although had been reported as “positive” in the last couple of days, were downtoned by Russian President Vladimir Putin,  saying that Kyiv is not serious about finding a mutually acceptable solution.

XAG/USD’s jumped on the headline, from $24.70 towards daily highs around $25.05, but stabilized around the $24.80-90 area,  as the Federal Reserve monetary policy looms.

The US Federal Reserve to hike 25 bps on Wednesday

US Treasury yields pared earlier losses and finished in the green, with the 10-year T-note yield at 2.149%, barely flat, but reflecting Fed’s first rate hike.

On Wednesday, the US central bank is widely expected to hike rates for the first time in three years, which would leave the Federal Funds Rate at 0.25%. It would be followed by Fed’s Chair Jerome Powell’s press conference, in which he would be questioned about the Russia-Ukraine impact on the US economy.

Worth noting that the Fed would reveal the Summary of Economic Projections (SEP) and the update of the so-called dot-plot, which reflects the monetary policy projections of the board.

XAG/USD Price Forecast: Technical outlook

On Tuesday, silver visited the 78.6% Fibonacci retracement, a solid demand level for the white metal, just short of intersecting with the January 20 high previous resistance/support around $24.70. Noteworthy that  XAG/USD spot price is above the daily moving averages (DMAs), and while the 50-DMA sits between the 200 (top) and the 100-DMAs (bottom), it is accelerating towards crossing above the 200-DMA, which could cause a golden-cross.

That said, XAG/USD bias is upwards, and its first resistance level would be $25.00. A decisive break would expose the confluence of the 50% Fibonacci level and November 25, 2021 high at $25.39, followed by the $26.00 mark.