Silver (XAG/USD) trades on a strong footing on Monday, reaching levels above $65.80 at the European session opening times, after bouncing from the $63.50 area on Friday. Precious metals are being boosted by US Dollar (USD) weakness, as recent US macroeconomic data has curbed hopes of Federal Reserve (Fed) interest rate hikes this year.
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US data released on Friday endorsed this view, as July’s Retail Sales dropped 0.6% against market expectations of a 0.1% gain, following a 0.2% increase in June. These figures follow relatively soft producer and consumer price figures released earlier in the week and another disappointment in Nonfarm Payrolls in the previous week. Against this background, investors have dialed back bets of a Fed hike in September to 30%, from above 50% one week ago, according to data by the CME Group’s.
Technical Analysis: Key resistance is at the $67.00 area
XAG/USD reached the target of a bullish Head & Shoulders pattern at the $67.00 area last week, and has been consolidating ever since, with bearish attempts limited above previous highs, at $63.30. The pair, thus, holds a constructive near-term pattern and momentum indicators in the daily chart remain within bullish territory. The Relative Strength Index (14) is hovering above 60, and the Moving Average Convergence Divergence (MACD) line maintains a firm positive reading near 0.81, highlighting persistent upside pressure.
Bulls remain capped below the $66.00 area on Monday, which is closing the path towards the June 22 high, at $67.17. Further up, there is a heavier supply zone defined by the June 17 high, at $71.56, and the 200-day Simple Moving Average (SMA) around $71.70.
On the downside, the mentioned $63.30 area is expected to challenge bears, ahead of the August 6 and 7 lows, around $62.00 and the late July lows, in the mid-range of the $56.00s.
FAQs
1. What is the silver price forecast for XAG/USD?
The short-term outlook for XAG/USD remains cautiously bullish while silver holds above key support levels. A sustained move above $66 could open the way toward $67.50, $69 and $70.
2. Why is a weaker US Dollar positive for silver?
Silver is priced in US Dollars. When the dollar weakens, silver can become relatively cheaper for buyers using other currencies, which can support demand and prices.
3. Is $66 an important level for silver?
Yes. The $66 area is an important short-term resistance and breakout zone. A sustained move above it could improve the bullish technical setup.
4. What are the important support levels for XAG/USD?
The $64.50 and $63.20 areas are important short-term support zones. Holding these levels could help maintain the positive structure.
5. Can silver reach $70?
Silver could test $70 if it successfully breaks above $66 and continues to hold its bullish momentum. However, price targets are not guaranteed, and market conditions can change quickly.
Disclaimer
This article is intended for educational purposes only. The views and opinions expressed are those of individual analysts or brokerage firms and do not represent the views of GoldSilverReports.com. Investors are strongly advised to consult certified SEBI-registered financial experts before making any investment or trading decisions.
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