Current trend

The XAG/USD pair is trading at 30.40, smoothly developing positive dynamics.

The main reason why silver is slightly inferior to gold, which is renewing its highs, is the low demand for it on commodity exchanges. During political uncertainty, investors do not have enough free capital and prefer to keep most of it in a more stable asset. According to the London Mercantile Exchange (LME), the volume of silver futures trading this week is 72.3K positions, while the mid-June figure reached 130.0–140.0K. The latest report from the US Commodity Futures Trading Commission (CFTC) confirms the poor dynamics of volume change. In the producer category, the growth of buy positions over the week amounted to only 0.133K, and sell positions – 3.125K, signaling that the intensity of quote fluctuations will be low.

Another fundamental factor in the XAG/USD pair’s poor dynamics is the correction in the bond market, which is the main competitor for the metal group’s assets due to low volatility. Over the past week, the yield on leading 10-year bonds fell from 4.289% to 4.171%, which investors considered insufficient for redirecting capital to silver. As a result, the market is just beginning to restore trading volumes, and the last month of summer may pass in a sideways trend, after which the upward dynamics will probably return.

Support and resistance

On the daily chart, the trading instrument is moving within the Head and shoulders pattern. After the implementation, a decline to 25.00 may follow.

Technical indicators keep a buy signal against the correction. The EMA oscillation range on the Alligator indicator is narrowing downwards, and the AO histogram is forming correction bars, falling in the purchase zone.

Resistance levels: 30.76, 32.14.

Support levels: 30.00, 28.70.

Trading tips

Short positions may be opened after the price declines and consolidates below 30.00, with the target at 28.70. Stop loss – 30.70. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 30.76, with the target at 32.14. Stop loss is 30.00.