Silver (XAG/USD) price has experienced a V-shaped recovery after a sharp sell-off in the first half of December. The ongoing rally in the precious metals is fuelled by multiple fundamental and technical factors which will be discussed in this article.
At the time of writing, XAG/USD was down 0.014% at the start of New York session on Monday. However, Gold price showed resilience once again and was up 0.12% at press time. This positive price action in bullion was due to a 0.12% pullback in DXY index.
Metals have been experiencing major capital inflows since last week’s FOMC meeting where the US Fed came out as dovish. Consequently, analysts are now expecting rate cuts as soon as the first quarter of next year. However, the weakening job market suggests that the landing might not be as soft as being expected.
Silver price per ounce dipped to $23.72 on Monday before recovering to $23.80. However, it still remained 2% below last week’s highs and 8.16% from monthly highs. Technical analysis suggests that the metals could be poised for a rally amid favorable economic conditions.
Following chart shows the price action of XAG/USD pair on the daily timeframe. Each candle on this chart encapsulates the price action of a whole day. From this chart, it is quite evident that the bulls are desperate to break back into the uptrend by breaking above the upward trendline.
A breakout will make Silver price prediction quite bullish as the metal may then head toward the imbalance which lies above $24.60. However, this outlook would be invalidated if the price breakdowns below 23.58, which is the 200-day moving average. This moving average is shown as a yellow line in the following chart.
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