Silver Price Analysis: XAG/USD seems poised to appreciate further and aim to reclaim $21.00

Silver oscillates in a narrow band and consolidates its recent gains to a multi-week high.

The overnight breakout through the 50-DMA/50$ Fibo. confluence favours bullish traders.

Any meaningful dips could now be seen as a buying opportunity and remain short-lived.

Silver consolidates the previous day's strong gains to a six-week high and remains confined in a range above mid-$20.00s heading into the North American session.

The overnight breakout through the $20.30-$20.35 confluence - comprising the 50-day SMA and the 50% Fibonacci retracement level of the $22.52-$18.15 downfall - favours bullish traders. Positive technical indicators on the daily chart add credence to the constructive set-up and support prospects for a further near-term appreciating move.

Hence, a subsequent move up towards the 61.8% Fibo. level, around the $20.85 area, now looks like a distinct possibility. Some follow-through buying beyond the $21.00 mark would be seen as a fresh trigger for bulls and lift the XAG/USD towards the $21.40-$21.50 intermediate resistance en-route the $22.00 round-figure mark.

The latter coincides with the 100-day SMA and should keep a lid on any further gains for the XAG/USD, at least for the time being. That said, a convincing break above should pave the way for an extension of the recent recovery move from a two-year low, around the $18.15 region touched on July 14.

On the flip side, the $20.35-$20.30 confluence resistance breakpoint now seems to protect the immediate downside ahead of the $20.00 psychological mark. This is closely followed by the $19.80-$19.75 region (38.2% Fibo. level), Friday's swing low around the $19.55 area, and the 23.6% Fibo. level support, around the $19.20 zone.

Failure to defend the aforementioned support levels would negate any near-term positive bias and shift the bias back in favour of bearisha traders. The XAG/USD would then turn vulnerable to weaken further below the $19.00 mark, towards the next relevant support near the $18.40 area en route to the YTD low, around the $18.15 region.

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Silver Price Analysis: XAG/USD rallies into the low $25.00s amid safe-haven bid, despite higher yields

Silver has seen a decent push higher on Monday amid geopolitical/China lockdown worries, shrugging off the headwind of higher yields.

XAG/USD has rallied back to near $25.20, up over 40 cents, and is eyeing late March highs at $25.85.

Fed speak and US inflation will be in focus this week and could test bullish conviction.

Risk-off trade in global equities as markets fret about recent news regarding the Russo-Ukraine war and the risk of a further widening of lockdowns in China has offset the negative impact of a continued sharp rise in global yields on precious metals markets. Indeed, though US 10-year yields have rallied a further 3-4bps to a fresh multi-year high above 2.75%, thus increasing the opportunity cost of holding non-yielding assets (like precious metals), spot silver (XAG/USD) trades with impressive on the day gains of more than 1.7%.

XAG/USD has rallied more than 40 cents from opening levels near $24.75 to current levels around $25.20 and, in doing so, broken to the north of its 21-Day Moving Average at $24.92. Technical buying on the break above a downtrend that had been in play since early March certainly seems to have helped. Bulls will now be eyeing a test of late March highs at $25.85 ahead of a potential run towards last month’s highs near $27.00.

But the silver bulls won’t be declaring victory for the week just yet, given a plethora of key upcoming risk events. A barrage of Fed policymakers will be speaking in the coming days (with a total of four appearing on Monday alone) and are likely to reiterate recent hawkish messages. But the main event(s) of the week will be the release of US Consumer and Producer Price Inflation data on Tuesday and Wednesday which, if they surprise to the upside, could exert even more pressure on the Fed to be hawkish.

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