Silver Price Forecasts: XAG/USD holds around $66.00 buoyed by US Dollar weakness

Silver (XAG/USD) is trading flat at the $66.00 area on Tuesday, holding minor gains on the weekly chart after bouncing from the mid-range of the $64.00s last week. The precious metal is drawing some support from a soft US Dollar, as US markets return from a long weekend, with traders awaiting Friday’s US Consumer Price Index (CPI) release to assess the outcome of next week’s Federal Reserve (Fed) meeting.

Analysts at HSBC observe that a combination of “weaker US data, persistent inflation concerns, policy credibility questions, and political risks all weigh on the Dollar, fueling the debasement conversation.” However, they note that Fed Chairman Warsh’s Jackson Hole remarks marked an important turning point, as his speech “helped ease one key part of that story by restoring confidence in the Fed’s commitment to fight inflation.”

This has “helped reduce the risk that weak policy credibility would become a lasting drag on the Dollar and denting the debasement narrative, at least for now,” say the HSBC experts. Even so, the bank cautions about "broader structural concerns, especially around US fiscal sustainability, which could still return and weigh on the Dollar yet again.”

Technical Analysis: Looking for direction halfway through the mintly range

XAG/USD trades at $66.02 halfway through the monthly range, roughly between $63.00 and $71.00, just below the key 200-day Simple Moving Average, at the $73.00 area. Momentum indicators in the daily chart are neutral, with the Relative Strength Index (14) around 52 and the Moving Average Convergence Divergence (MACD) slipping modestly below zero, all in all reflecting a lack of clear bias.

Initial resistance is seen at the August 25 and 27 lows around $67.40, ahead of the June 12 and August 28 highs, between $71.12 and $71.56, and the mentioned 200-day SMA at $72.95.

On the downside, Friday's low, near $64.75, might hold bears ahead of a key support level in the $63.00 area. A break of that level would confirm a bearish Head & Shoulders (H&S) pattern, increasing pressure towards the August 6 low at $60.87.