Rampaging bulls on the XAGUSD have enabled silver price action to continue its surge to multi-year highs for the 3rd straight day. The price surge enters the 3rd day, ahead of a slew of manufacturing PMI data that starts on Friday in Europe and continues into the US, UK and other countries next week. Silver is currently trading at 22.377, after surging nearly 15% in the last two days.
The white metal is trading at levels not seen since September and October 2013. The sharp spike in silver price can be attributed to the continuous depreciation of the US Dollar, increased consumer demand from India and China, as well as improving market sentiment. If the manufacturing PMI data show further recovery in factory activity, bulls may be re-energized to make further inroads in the market.
Analysts at Commerzbank are also bullish on silver prices, on the back of the EU recovery fund and expectation of further stimulus from the US government. Silver is presently off its intraday highs of $23.05 as traders initiate short-term profit-taking on the pair.
Technical Outlook for XAGUSD
Silver price action on the XAGUSD monthly chart shows that the multi-year range formed by the pair has given way to the upside break. The new upside target in the near term is the 24.66 price level, which is where previous highs of 1 May and 1 August 2013 are found. Above this level, 26.325 forms the medium-term target; only reachable if the initial upside target gives way.
A pullback from present levels targets 21.33 (1 July 2014 and 1 July 2016 highs), with 20.73 and 20.06 forming the next downside targets. The manufacturing PMI data are the subsequent fundamental influences to watch out for, starting with that of the Eurozone on Friday.