Silver prices (XAG/USD) extended gains for a second day on Thursday, trading near $38.20 after rebounding from an intraday low of $37.50 in the European session. The metal continues to consolidate within a symmetrical triangle pattern, with resistance at $38.20 and initial support at $37.50.
The rebound comes ahead of Fed Chair Jerome Powell’s speech at Jackson Hole on Friday, which investors expect could provide clues on future monetary policy.
Dollar Strength and Mixed U.S. Data in Focus
The U.S. Dollar Index (DXY) advanced to a one-week high of 98.50, supported by stronger-than-expected S&P PMI data, which reinforced optimism about economic growth. However, U.S. Initial Jobless Claims climbed to an eight-week peak, signaling a softening labor market.
The combination prompted traders to scale back bets on aggressive rate cuts. The CME FedWatch Tool now shows a 75% probability of a September rate cut, down from 81% earlier in the day.
Technical Outlook: Triangle Breakout in Play
From a chart perspective, silver’s rebound from $37.50 brought prices back above the 100-period Simple Moving Average (SMA) at $37.75, now serving as immediate support.
- Upside scenario: A decisive move above $38.20 (triangle resistance) could spark a breakout, targeting $38.74 (August 14 high) and $39.53 (multi-year peak).
- Momentum signals: The RSI has risen to 59, suggesting improving bullish momentum, while the MACD has turned positive. The ADX, at 24.96, points to moderate but strengthening trend conditions.
- Downside scenario: Failure to break above resistance may leave XAG/USD range-bound, with support at $37.75 (100-SMA), followed by $37.50 and $37.00. A breakdown below these levels could open the door to $36.50.
Summary
Silver is staging a two-day rebound, hovering near $38.20 as traders weigh a stronger U.S. Dollar against expectations for Fed easing. Technicals suggest a breakout above the triangle barrier at $38.20 could fuel further gains toward $39.50, while failure to clear resistance risks keeping prices locked in range. Powell’s Jackson Hole speech remains the key near-term catalyst for XAG/USD direction.
