Silver Price Forecast: XAG/USD testing $51.00 after rejection at $51.72

LONDON (October 13) Silver(XAG/USD) found resistance at fresh four-year highs right above $51.70 and retreated sharply during Mondfday’s European morning session. The metal found support at the 50..15 area to pare some losses, but is struggling to remain above $51.00 at the time of writing.

The fundamental context is supportive for precious metals, which rallied during the Asian session with investors looking for alternative assets as the US trade rift on rare earths threatens to lead to a full-blown trade war, again.

Furthermore, the US Government shutdown enters its third week without prospects of a solution in sight, and with investors pricing in a Fed rate cut later this month and high chances of another one in December.

Technical analysis:

The bullish trend remains in play with $52.00 on focusSilver maintains its bullish trend intact, with price action moving within an ascending channel from mid-September lows. The trend looks well overextended, and these structures tend to lead to corrections, but that option seems highly unlikely in the current circumstances.

Technical indicators show a significant bullish pressure, with immediate resistance at the intra-day highs of $51.70. Further up the ascending channel’s top, in the area of 52.00 and the 161.8 Fibonacci extension of the October 9 reversal, at $52.90, are plausible targets.

So far, pullbacks are attracting buyers, and the pair seems to have significant support in the area around the $50.00 psychological level, where bears were capped earlier today. Further down, the base of the ascending channel is in the vicinity of $49.55.

FXStreet