Silver (XAG/USD) price appears to be consolidating after a sharp decline in the past two weeks. The precious metal tanked as the price faced an intense rejection from the $25.4-$26.8 supply zone. Silver price per ounce is currently in the midst of a recovery after closing the last two weeks with a 7% loss.
After a 1.5% bounce last Friday, XAG/USD is trading sideways on Monday. At press time, Silver is trading at $23.86 after rising by 0.04% during its London session. The minor gains appear to be caused by a correction in the DXY Index, which slid by 0.11% on the first trading session of the week.
XAG/USD Rebounds, But There’s A Catch
While Gold price has also dropped significantly in the last two weeks, Silver is leading the latest drop in commodity prices. In fact, Copper and Zinc have also shown a negative price action during this time. There are multiple factors behind this drop in Silver price per ounce, but the biggest of them all is the slower-than-expected recovery in China.
Recent stats show that the Chinese economy is still lagging in recovery after the end of lockdown restrictions. This has intensified the recession fears and triggered a sell-off in Silver, Copper, and Zinc. A strong bounce in the DXY index further intensified this selling pressure. The next month’s FOMC meeting will play a key role for commodity prices.
Silver Price May Drop More – Here’s Why
The following XAG/USD chart suggests that the ongoing correction may go much deeper. This is because the price is yet to hit the 0.5 fib retracement level, which usually results in a potential reversal. This level currently sits at $23.04, which is 3.3% below the current price. The ongoing bounce is due to the bullish RSI divergence on 4H chart.
Therefore, the Silver price prediction of $23.04 appears to be quite valid, considering the momentum behind the ongoing downward push. To avoid this bearish outlook, Silver needs to reclaim the $24.6 level. However, on a higher timeframe, Silver and Gold still remain bullish for me.
If you are into cryptocurrencies & commodities and need my up-to-date analysis of these assets, you are welcome to join my free Telegram channel.