XAG/USD Price Forecast: Defends bearish flag support near mid-$59.00s
- Silver remains on the back foot for the third consecutive day on Wednesday.
- The technical setup favors bears and backs the case for further depreciation.
- A break below channel support is needed to reinforce the negative outlook.
Silver (XAG/USD) trades with a negative bias for the third straight day and hovers around the $59.80 region during the Asian session on Wednesday. The white metal, however, defends a support marked by the lower boundary of a short-term descending channel, around mid-$59.00s or the weekly low, touched on Tuesday.
Looking at the broader picture, the downward-sloping channel constitutes the formation of a bearish flag against the backdrop of the recent decline. Moreover, the recent repeated failures near the 100-period Simple Moving Average (SMA) on the 4-hour chart suggest that the path of least resistance for the XAG/USD pair is to the downside.
Adding to this, the latest Moving Average Convergence Divergence (MACD) reading at -0.33 and a Relative Strength Index (RSI) around 44.16 hint at the risk of further downside within the range. However, a convincing break below the channel support is needed to reaffirm the negative bias and back the case for any further depreciation.
The XAG/USD might then weaken below the $59.00 mark, towards testing the next relevant support near the $58.35-$58.30 zone and the $58.00 mark. The downward trajectory could extend further towards the $57.25 region en route to the $57.00 mark and the year-to-date low, around the $55.70 area, touched in June.
On the topside, initial resistance appears at the 100-period SMA at $62.32, with a break above exposing the upper channel line at $64.21 as the next hurdle. Only a sustained move over these barriers would ease current bearish pressure and pave the way for some meaningful upside in the near term.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD 4-hour chart
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Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
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