Silver price showed strength in last week’s sell-off as gold price fell more than silver. However, after a breakdown below the $22.1 support, silver price is plummeting more than gold this week. At the time of writing, Silver is priced at $21.375, which is a new 7-month low for the metal.
The preferred gauge of the US Federal Reserve, PCE Inflation, increased less than expected in August. Despite this, DXY had a 0.5% surge on Monday. This resulted in an intense sell-off in precious metals like Gold and Silver. Gold price is down 0.75%, while Silver is trading 3.4% below its last week’s close.
Where Is XAG/USD Heading?
Gold continues to remain unattractive for investors as DXY makes its way towards its 10-month highs. According to a market analyst at Kinesis Money, investors have started to accept that interest rates are likely to remain high for a long time. This is a major reason behind the ongoing downtrend in the Silver price per ounce.
In August, the US reported a slight ease in PCE inflation. As a result, traders expect the Fed to keep the interest rates in the 5.25%-5.5% range for the rest of the year. According to future contracts, the market expects the Fed to initiate rate cuts after the first half of 2024.
Silver Price Prediction
XAG/USD has broken below its support level of $22-$22.5. This key support level has been acting as a major demand zone for the past few months. At press time, the price of the safe haven asset is standing 8.8% below the 200 MA as bears continue to gain momentum. Only a reclaim of $22.5 can make Silver price prediction bullish once again.
A glance at the chart below shows the price heading towards the $20.5-$21 demand zone, which is highlighted as a green box. Another potential support level can be the downward trendline, which has been respected as support multiple times since the start of 2023.
