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

Silver (XAG/USD) is currently trading at $66.00, buoyed by a weakening US Dollar as US markets return from a long weekend. Analysts at HSBC suggest that factors such as weaker US data, persistent inflation concerns, policy credibility questions, and political risks are contributing to the dollar's decline, which is driving the devaluation narrative.

However, they credit Fed Chairman Jerome Powell's recent remarks at Jackson Hole for restoring confidence in the Fed's commitment to fight inflation, reducing the risk of a lasting drag on the dollar. Despite this, the bank warns about broader structural issues, including US fiscal sustainability, which could still weigh on the dollar.

The XAG/USD price trades midway between $63.00 and $71.00 on the monthly range, below the 200-day Simple Moving Average. Momentum indicators are neutral, with the Relative Strength Index around 52 and the MACD slightly below zero. The next key resistance levels are at $67.40 and $71.56, while the $64.75 level could serve as support for bears.

If this level is breached, it would confirm a bearish Head & Shoulders pattern, pushing prices towards the August 6 low of $60.87. Silver, a precious metal used as a store of value and a hedge against inflation, can also be influenced by industrial demand, mining supply, and recycling rates. Its price often mirrors that of gold, as both are considered safe-haven assets.