Silver (XAG/USD) price tanked really hard last week after a major upthrust. The negative price action occurred after a rejection from the $25.4-$26.8 supply zone, which was repeatedly mentioned in my previous articles. Consequently, Silver price per ounce had its biggest losing week of the year.
On Monday, XAG.USD showed some recovery, and the pair was trading 0.62% higher at the start of its London session. The brief recovery followed a 6.55% drop in last week which was the biggest weekly loss since October 2022.
Why Is XAG/USD Tanking?
Silver is leading the latest drop in commodity prices and is being accompanied by Copper and Zinc in this negative price action. 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.
The latest economic data shows that the second-largest economy, China, is still far from being fully recovered after the lockdown. This led to demand concerns for industrial metals like Silver, Copper, and Zinc, due to which they experienced a sharp sell-off. A strong bounce in the DXY index further intensified this selling pressure.
Silver Price Per Ounce May Drop Another 4.4%
Technical analysis of the XAG/USD chart suggests that the ongoing correction may go much deeper if bulls don’t step in soon. A weekly closure below the $24.6 resistance and the trendline are the signs of a bearish reversal, along with a formation of a double-top pattern.
In the coming days, the Silver price prediction of $23 appears to be quite valid, considering the momentum behind the ongoing downward push. This price target aligns with the 0.5 fib retracement level, which is 4.4% below the current price. The only way to avoid this outlook is to gain strength above $24.6. On a higher timeframe, Silver and Gold still seem to be set for massive growth in 2023.
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