Silver Price Forecasts: XAG/USD holds below $ 61.00 amid US Dollar strength

Silver prices remained stagnant on Tuesday, trading near $60.80, falling short of breaching the $61.00 mark and indicating a potential 8.5% monthly decline in September. As the US Dollar gained strength due to high long-term yields and expectations of additional Federal Reserve rate hikes, precious metals, including Silver, suffered a decline.

The USD Index, measuring the Greenback's value against six major currencies, hit a yearly high of 101.49. John Velis, analyst at BNY Markets, stated that investors are banking on central banks raising rates in response to inflation, rather than actual inflation driving yields higher. Technical indicators, including the Relative Strength Index and Moving Average Convergence Divergence, point to a bearish outlook for Silver.

The most recent break of the Head & Shoulders pattern's neckline, at $62.20, and declining momentum indicators further support the negative sentiment. Should the price remain below the September 9 low of $60.87, the next potential target could be the September 8 low at $59.30, or the 78.6% Fibonacci retracement level at $58.15. On the upside, the initial resistance level is the Head & Shoulders neckline, just above $62.20, with a break potentially signaling a shift towards the September 5 high of $65.00.

Silver, a widely traded precious metal, has historically served as a store of value and medium of exchange, offering diversification benefits and potential hedge during high-inflation periods. Factors such as geopolitical tensions, recession fears, and interest rates impact Silver prices, which are priced in US Dollars. Additionally, Silver's industrial demand, particularly in electronics and solar energy, and its relationship with the US, Chinese, and Indian economies influence its valuation.