Silver Price Forecast: XAG/USD Displays Volatility Contraction Near $23

By Sagar Dua of FXStreet

Friday, September 8, 2023 1:59 PM EST

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Silver has seen price volatility compression near the $23.00 level while the US dollar remains subdued.
Investors have been baffled due to rising hopes of the Federal Reserve’s soft landing and a resilient US dollar.
Silver's price looks set to consolidate below the 61.8% Fibonacci retracement at $23.30.

The price of silver has seen a volatility squeeze near the crucial support of $23.00 following the footprints of a subdued US dollar. The metal has struggled to find a direction as investors have been baffled due to rising hopes of the Federal Reserve’s soft landing and a resilient US dollar amid deepening global uncertainties.

The S&P 500 opened on a positive note as investors started digesting fears of a global economic shakedown due to rising interest rates by central banks. The US Dollar Index (DXY) turned sideways at around 105.00 after a stalwart rally.

Chicago Fed Bank President Austan Goolsbee said the central bank is aiming to push the economy onto a “golden path,” meaning a situation where inflation recedes without triggering a recession. Meanwhile, strong wage growth is still a major concern for the Fed, as higher disposable income could elevate inflationary pressures.

Meanwhile, investors continue to await the US Consumer Price Index (CPI) data for August, which will be published on Wednesday. Investors will keenly watch core inflation data, as it has remained extremely stubborn due to strong consumer spending momentum.

Silver Technical Analysis

The silver price looks set to consolidate below the 61.8% Fibonacci retracement (plotted from the Aug. 15 low at $22.23 to the Aug. 30 high at $25.00) at $23.30. The Exponential Moving Average (EMA) at $23.13 may continue to act as a barricade for silver price bulls.

The Relative Strength Index (RSI) shifted into the 40.00-60.00 range from the bearish range of 20.00-40.00, which indicates that bearish momentum has faded. Meanwhile, the bearish bias has not completely faded yet.

Silver Hourly Chart

XAG/USD Technical Levels

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