Current trend

Prices for precious metals, including silver, are supported by expectations of an imminent easing of the monetary policy of the US Fed, so the XAG/USD pair is growing to 29.57.

This week, it became known that the heads of the Federal Reserve Banks (FRB) of Chicago and New York voted in July to reduce the cost of borrowing by 25 basis points but most officials decided to keep it at the same level. Experts believe that the refusal of the September rate correction is unlikely. However, the size of the first adjustment will be determined by the August unemployment data. If the upward trend continues, the step will probably be –50 basis points, otherwise, officials will limit it to –25 basis points. The Chicago Mercantile Exchange (CME) FedWatch Instrument estimates the probability of these scenarios at 34.5% and 65.5%, respectively. The expected transition to a “dovish” rate weakens the American currency, supporting the assets of the metal group.

The correction continues in the silver contracts market. According to the latest US Commodity Futures Trading Commission (CFTC) report, last week, net speculative positions in silver increased from 45.3K to 49.3K, and buyers maintain an advantage amid poor demand for contracts. According to the report on positions secured by real money, the balance of “bulls” is 41.265K against 9.267K for “bears.” Last week, buyers opened 4.572K deals, while sellers reduced their number by 3.170K contracts, reflecting increased trading activity.

The long-term trend remains downward. However, after reaching the support level of 26.55 in early August, a correction is developing, within which the price consolidated above the resistance level of 29.06. Now, it has become a support level, and the target for corrective purchases on the retreat to 29.06 is 30.70. If the quotes consolidate below 29.06, short positions, with the targets of 27.55 and 26.55 (the August low), are relevant. The RSI (21) indicator is growing but has not yet reached the overbought area, being in the neutral zone and allowing both purchases and sales of the asset.

After the breakout of the key resistance area of ​​28.72–28.51 last week, the medium-term trend reversed upwards to zone 2 (30.82–30.61). Now, a correction is developing, which may reach the trend line of 28.08–27.87. After testing, it is worth considering new purchases with the target at the current week’s high of 30.15. In case of a breakdown of the key support area of ​​28.08–27.87, the medium-term priority will reverse downwards, and short positions, with the targets at 25.98–25.77 will become relevant.

Support and resistance

Resistance levels: 30.71, 32.23.

Support levels: 29.06, 27.55, 26.55.

Trading tips

Long positions may be opened from 29.06, with the target at 30.71 and stop loss 28.60. Implementation period: 9–12 days.

Short positions may be opened below 28.60, with the target at 27.55 and stop loss 29.06.