The spot Silver price has finally reclaimed the $24.00 milestone, which could put XAG/USD back on the road to this year’s high. Over the last three months, taper fears have been a constant source of frustration for the Silver price. This culminated in a Sunday night flash-crash that drilled Silver to a nine-month low of $22.26. Although since then, XAG/USD has been clawing its way higher, and on Friday finally clambered back above $24.00. Furthermore, Jerome Powell’s dovish Jackson Hole address could send the Silver price higher still.
Following last year’s impressive +48% rise, the bulls entered 2021 full of hope. However, the Silver price has struggled for direction in 2021 and is currently down 10% year-to-date. Most of the recent bearishness comes from high vaccination rates and economic reopenings, leading to calls for central banks to scale back asset purchases. These fears were further compounded last week when South Korea became the first major economy to raise interest rates since the pandemic started. However, despite telling the market he expects tapering to being before the end of the year, Fed chair Powell dismissed the notion of following South Koreas lead and said:
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,”
As a result, the US dollar lost ground against its major trading pairs, sending Gold back above the important $1,800 level and helping Silver build on its recent reversal. But the question is, what happens now?
XAG/USD Price Forecast
The daily chart shows that $24.00 has been an area of particular interest over the last year. As previous support, $24.00 was the catalyst for 20% rallies in August 2020 and April this year. Furthermore, a significant trend line from September 2020’s low is seen at $22.85. This reinforces the strong support below the market. Additionally, the Relative Strength Index (RSI) is breaking out on the upside. The current reading of 47.86 leaves plenty of room for the price to run higher. However, for this to happen, the Silver price must first uncap the resistance of a descending trend line at $24.09.
This morning XAG/USD is attempting to punch through the trend and traded as high as $24.096 before stalling. Upon confident clearance of $24.09, the 50,100 and 200-day moving average provide additional barriers to the upside. Although the 50 and 100 DMA’s are relevant, the 200-day at $25.17 provides the stiffest test. If Silver manages to close above this indicator, the bulls will be firmly in charge and aiming for $30.00.
The bullish outlook stays relevant as long as Silver holds the $24.00 mark on a closing basis. A failure to do so brings the long term trend line at $22.85 into view. Furthermore, If this threshold is breached, the Bears will run rampant, and the Silver price has the potential to slide to September’s $21.66 low.
Silver Price Chart (Daily)
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