Silver Price Analysis: XAG/USD extends pullback towards $24.50 amid quiet session

• Silver remains depressed for second consecutive day, edges lower of late.
• USD rebound underpins the u-turn from 50-DMA towards previous resistance from June.
• Mildly positive market sentiment fails to put a bid as traders await US, Canada return.
• ECB becomes the key event of the week, virus updates are important too.

Silver (XAG/USD) holds lower ground near $24.65 while keeping the previous day’s pullback moves during the initial Asian session on Tuesday. In doing so, the bright metal portrays the market’s indecision, as well as cautious optimism, following an off in the US and Canada.

It’s worth noting that the S&P 500 Futures hold onto the week-start cautious optimism, up 0.17% intraday by the press time while the US Dollar Index (DXY) closed positive for the first time in five days, off a monthly low, at the end of Monday’s trading.

The cautious optimism in the market, which underpins equity rally and dims demand for the safe-havens, takes clues from the US employment report published on Friday. With the dismal August month jobs report, odds of the Fed’s delayed tapering returns to the table and favor the risk-takers.

It should be observed, however, that the indecision over the key central banks’ near-term moves and grim conditions of the coronavirus keep the optimism in check, which in turn weigh on silver prices and favor the US dollar to correct higher.

Moving on, the XAG/USD traders will pay attention to China trade numbers for August and the reaction of the US and Canadian traders to the latest market developments. Considering the USD rebound, silver bears may want to fight the upbeat technical set-up.

Technical analysis

Given the sustained trading beyond the previous resistance line from June 11, around $24.55, coupled with the bullish MACD signals, silver buyers remain hopeful.

Also acting as short-term key support is an upward sloping trend line from August 09, close to $23.90.

Meanwhile, a convergence of 100-day and 200-day Simple Moving Average (DMA) near $25.90–$26.00 can challenge silver bulls after crossing the 50-DMA level of $24.82.

In a case where the metal prices remain depressed below $23.90, the odds of witnessing a fresh yearly low below the latest $22.16 can’t be ruled out.

Silver: Daily chart

Trend: Bullish