Silver (XAG/USD) price has remained very volatile this year. The price of the precious metal had almost a 9% surge in the first 3 months of 2023. However, the price action reversed after rejection from the $25.3-$26.8 supply zone. Consequently, Silver price has been in a downtrend since May 2023.
The XAG/USD pair continued to drop on Monday after falling 1.08% on Friday. At press time, Silver is trading at $23.38 as the precious metal was down 0.94% at the start of its London session. The DXY index started the week in green and was up 0.25%.
XAG/USD Tanks As DXY Index Surges
The ongoing slump in XAG/USD and the XAU/USD pairs can be attributed to a strong bounce in DXY index from its May lows. The dollar strength index is currently trading at its two-month highs which has resulted in a decline in Silver price per ounce.
The next week will be very crucial for Silver as the May 2023 CPI data gets revealed. The US Federal Reserve will also take a decision on the interest rates on next Wednesday. I expect the markets to remain volatile as these events approach. Most analysts are predicting a final 25 bps rate hike in upcoming FOMC.
Silver Price Breaks Out Of Trendline
In my last XAG/USD analysis, I mentioned that the price was attempting a breakout from the downward trendline on the daily chart. The price has now broken above this trendline and is now on its way to retest it. This retest will only be successful if the Gold price gets a strong rebound from its current lows.
For Silver price prediction to flip bullish, price needs to break above the $26.8 resistance on the daily timeframe. If the price gets a strong bounce from the $23 level, I expect a strong relief rally. The DXY index and the FOMC decision will keep the price in check in the coming weeks.
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