Silver Price Analysis: XAG/USD Tumbles, Bearish Grip Tightens Below $29.00

Silver (XAG/USD) prices took a significant hit on Wednesday, falling below the $29.00 mark as investors anxiously awaited the release of the Fed’s preferred inflation gauge, the core Personal Consumption Expenditure (PCE) Price Index. Recent data from major economies hinted at a potential re-acceleration of inflation, fueling concerns and driving investors away from the precious metal.

Technical Outlook: Bearish Engulfing Pattern Signals Further Downside

The formation of a bearish engulfing pattern last week and the bearish Relative Strength Index (RSI) suggest a continuation of the downward trend for silver. This technical setup indicates that sellers are firmly in control, with further losses expected in the near term.

Key Support and Resistance Levels to Watch:

  • Immediate Support: The first support level for XAG/USD is the June 10th high of $28.28. A break below this level could expose the psychological $28.00 mark.
  • Further Downside Targets: If selling pressure persists, silver could fall to the May 8th swing low of $27.01 and potentially even the 100-day moving average (DMA) at $26.82.
  • Resistance: The 50-day DMA at $29.17 acts as the first resistance level. A break above this level would be needed to invalidate the bearish outlook and potentially pave the way for a move towards the June 7th high of $31.54 and the year-to-date (YTD) high of $32.51.

Market Sentiment and Factors to Watch:

The current bearish sentiment surrounding silver is driven by factors such as the strengthening US Dollar, concerns about potential interest rate hikes, and rising inflation expectations. Investors are closely monitoring the release of the core PCE Price Index data and other economic indicators for further clues on silver’s price trajectory.