Current trend

Ahead of the September monetary policy meeting in the US, the XAG/USD pair reached its first buying target, starting to rise from the support area of 22.64–22.18.

Market participants are redirecting their capital to risk assets, expecting that officials will keep the interest rate at the same level with a probability of 86.5%. At least, it is now confirmed by the readings of the indicator of the Chicago Mercantile Exchange (CME) FedWatch Instrument. Nevertheless, inflation in the country is 3.2%, exceeding the target of 2.0%, while the core rate stays around 4.7%. The labor market remains strong, with a preliminary Q2 gross domestic product (GDP) of 2.4%, which is a risk factor for precious metals quotes.

Local correction on the silver contracts market continues: according to the latest report from the US Commodity Futures Trading Commission (CFTC), last week, net speculative positions on the asset decreased from 13.3K to 7.9K. At the moment, the “bulls” have taken the initiative, and their balance on the positions with swap dealers is 37.090K transactions against 30.246K “bearish” contracts. Last week, the buyers increased the number of contracts by 0.604K, while the sellers decreased them by 4.856K.

The long-term trend is upward and yesterday, the price reached the 24.35 resistance level, which was the first buy target from the 22.64–22.18 support area. In case of its breakout, the positive dynamics will continue to the July high of 25.20, after which the quotes may reach the April-May records at 26.00. If 24.35 is held, a downward correction to the support area of 22.64–22.18 will begin.

The medium-term trend remains downward but market participants are trying to reverse it. The key trend resistance is in the 24.09–23.92 area, and the price is trying to consolidate above it, after which the trend will reverse upwards with the target in zone 2 (25.79–25.62). If the quotes return below the 24.09–23.92 zone, short positions with the first target at the August low at 22.23 and the main direction in the support area of 21.86–21.69 are relevant.

Support and resistance

Resistance levels: 24.35, 25.20, 26.00.

Support levels: 22.64, 22.18, 21.57.

Trading tips

Long positions may be opened above 24.45 with the target at 25.20 and stop loss around 24.15. Implementation period: 9–12 days.

Short positions may be opened below 23.90 with the target at 22.64 and stop loss around 24.50.