Spot Silver Analysis:
Silver Consolidates Following FOMC Minutes
The US Dollar[1] strengthened slightly after the Federal Reserve[2] reiterated its dovish position in last night’s FOMC meeting, adopting a ‘wait and see’ approach for policy going forward. While policy remains unchanged, demand for Gold[3], Silver[4] and other safe-haven assets[5] retreated, pushing price action back into its range-bound state.
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The recent surge in Silver[7] has seen price action favoring the bulls, with the precious metal testing the psychological level[8] of 30.00 in August. However, failing to break above this level, saw bears exerting downward pressure on XAG/USD[9], into a zone of confluency between key Fibonacci levels which have provided support and resistance[10] for some time. Meanwhile, the Stochastic indicator[11] remains above 80, a possible indication that Silver is currently trading in overbought territory.
XAG/USD Monthly Chart
Chart prepared by Tammy Da Costa[12], IG
Silver Remains Above Moving Average – For Now
From a short-term perspective, the daily chart below highlights that price action remains above the 50-day Moving Average (MA) and a bullish continuation is still likely. The Moving Average Convergence/Divergence (MACD)[13] has crossed below the signal line from above, possibly indicating that upward momentum has decreased although the fact that it remains above zero, means that the trend has not reversed just yet.
A key level of support[14], now remains at the psychological level of 26.00, which is also the 38.2% Fibonacci retracement level for the move between March 2011 high and
