Silver (XAG/USD) price is testing the 200 MA for support. The price of the precious metal made a lower high before correcting 5% toward 200 MA. The price of the precious metal currently stands at $23.46, down 0.3% till press time.
The dollar continues to gain strength due to increased demand driven by high interest rates. The DXY index made a fresh 5-month high of $104.8 on Tuesday. Typically, the Dollar Strength Index and the price of metals have an inverse correlation. Thus, the recent rally in the index contributed to a sell-off in metals.
Chinese Data Triggers Sell-Off In Silver
Silver has seen a 5% correction from its new monthly high after weak PMI reports from Europe and China. However, the precious metal is still maintaining a strong industrial demand and tight supply that may help to hold its value.
In other news, The FOMC meeting is also around the corner. Most analysts expect the Federal Reserve to keep the interest rates at their current level. They listed the weak job data from the US and cooling inflation as the reasons for the pause in rate hikes. Silver price per ounce is currently trading 17.3% above its yearly low.
Silver Price Prediction
The XAG/USD chart shows the price retesting the 200 MA level which lies at $23.4. In August, the price for the metal rallied by 10.3% after bouncing off the trendline and reclaiming 200 MA.
The Silver price forecast depends upon the bulls’ ability to hold the 200 MA. If the price stays above the $23.4 level, bulls can expect a retest of the $25 resistance level. However, if the price breaks below 200 MA, a retest of the upward trendline will be on the cards.
I predicted this bounce in precious metal prices in my last Silver price forecast. I also regularly update the price targets on my Twitter, where you are welcome to follow me.