Silver Price Forecast: XAG/USD extends its rally to five days as bull’s eye $26.00

• On Tuesday, the white metal rose close to 2% in a mixed market mood.
• Geopolitics, mixed US inflation data, and China’s Covid-19 outbreak boost Silver.
• Silver Price Forecast (XAG/USD): Upward biased but about to reach overbought levels.

Silver (XAG/USD) extended its rally in the North American session, trading above the April 11 cycle high of $25.37, amid a mixed market mood, courtesy of the Russian-Ukraine crisis, hotter than expected US inflation, and China’s coronavirus outbreak. XAG/USD is trading at $25.58.

Russo-Ukraine tussles, hot US inflation, and China’s Covid-19 outbreak lifts precious metals

Global equities are trading mixed, with European bourses down while their US counterparts rise. Overnight, Ukrainian President Zelenskyy reported that Russia could make use of chemical weapons, while the US Pentagon Press Secretary Kirby said that the US is aware of this but it would continue to monitor the situation. On the Russian side, President Vladimir Putin said that there is no doubt that the military operation in Ukraine will achieve its objectives. Furthermore, earlier in the North American session, Russian President Putin added that talks with Ukraine are at a dead end.

Meanwhile, China’s Covid-19 outbreak helped to ease oil prices but kept close to 25 million people in lockdown.

Aside from this, the US economic docket reported US inflation for March. The headline figure rose by 8.5% y/y, higher than the 8.4% estimated by analysts, while the so-called Core CPI, which excludes volatile items, expanded by 6.5%, lower than the 6.7% foreseen

The market’s initial reaction was that the greenback fell below the 100.000 mark, while US Treasuries edged lower as investors assessed that March’s reading could be the peak of US inflation.

Meanwhile, money market futures keep their aggressive forecasts of the Federal Reserve hiking at 0.50%. The odds show a 94% chance that the Federal Reserve would lift the Federal Funds Rate (FFR) to 1% in its May meeting.

Silver Price Forecast (XAG/USD): Technical outlook

XAG/USD’s daily chart confirms that Silver has an upward bias. The daily moving averages (DMAs) reside below the spot price, though it’s worth noting that the 200-DMA at $23.90 is trapped between the 50-DMA at $24.56 and the 100-DMA at $23.72.

Silver’s 1-hour chart bias is aligned with the daily chart, and the uptrend is intact. The price action of the last two candlesticks shows that the rally is overextended, further confirmed by the Relative Strength Index (RSI) at 67.92, close to reaching overbought conditions.

Upwards, the XAG/USD first resistance would be the confluence of the March 24 cycle high and the R2 pivot point around the $25.75-85 range. A breach of the latter would expose the psychological $26.00 mark, followed by the R3 pivot at $26.12.

On the downside, the XAG/USD first support would be the R1 daily pivot at $25.40. Once cleared, the next support would be the confluence of March 31 and the daily pivot at the $25.09-05 range, followed by the 50-hour simple moving average at $24.97. A decisive break would expose a solid support area near the confluence of the 100, the 200-hour SMAs, and the S1 pivot point around $24.68-72.