Silver Price Analysis: XAG/USD consolidates just below $25.50 eyeing breakout to fresh multi-month highs

Silver Price Analysis: XAG/USD consolidates just below $25.50 eyeing breakout to fresh multi-month highs
  • Silver is consolidating close to multi-month highs not far below $25.50 as markets remain intensely focused on the Ukraine conflict.
  • Technicians have noted that spot silver prices have over the last few days formed an ascending triangle.
  • Upcoming tier one US data releases (ISM Services on Thursday, NFP on Friday) will play second fiddle for geopolitics.

Spot silver (XAG/USD) prices are consolidating close to multi-month highs with the $25.50 per troy ounce mark for now acting as resistance, but ongoing nervousness about the ongoing Ukraine conflict and its economic impact underpinning the safe-haven metal for now. At current levels in the $25.30s, spot silver trades broadly flat on the day, with focus for now on talks between Ukrainian and Russian delegations in the hopes that some sort of ceasefire might be in the offing.

Given maximalist demands still being made by Russian President Vladimir Putin on Tuesday, demands which the Ukrainian government is very unlikely to accept, hopes that a broad ceasefire agreement can be reached are slim. That suggests no end in sight for the rally in the prices of commodities exported by Russia (oil, gas, various agricultural products and base metals), which will likely keep assets deemed as offering inflation protection in demand (like silver).

Technicians have noted that spot silver prices have over the last few days formed an ascending triangle, a pattern that is more often than not indicative of a bullish breakout. Technical buying on a break above the $25.50 could dovetail nicely with the fundamentals if the Ukraine conflict continues to intensify and Western nations are expected to continue tightening the sanctions noose around Russia’s neck. Silver can move aggressively and some bulls likely have their sights set on mid-2021 highs in the $28.00 area.

Silver Price Analysis: XAG/USD consolidates just below $25.50 eyeing breakout to fresh multi-month highs - 1

With focus so heavily on geopolitics, upcoming tier one US data releases (ISM Services PMI on Thursday and the official jobs report on Friday) and the second day of Fed Chair Jerome Powell’s testimony before the US Congress will take something of a back seat. Powell explained on Wednesday that current uncertainties regarding the impact of the Ukraine war would not deter the Fed from getting moving regarding removing policy stimulus. An expected strong jobs report on Friday should support this stance and probably won’t dent silver’s near-term appeal much.

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