Silver Price Forecast: XAG/USD displays volatility contraction near $23, following subdued US Dollar

• Silver price volatility compresses near $23.00 while the US Dollar remains subdued.
• Investors turn baffled between rising hopes of the Federal Reserve’s (Fed) soft landing and resilient US dollar.
• Silver price consolidates below the 61.8% Fibonacci retracement at $23.30.

Silver price (XAG/USD) demonstrates a volatility squeeze near the crucial support of $23.00, following the footprints of the subdued US Dollar. The white metal struggles to find a direction as investors turn baffled between rising hopes of the Federal Reserve’s (Fed) soft landing and resilient US dollar due to deepening global uncertainties.

The S&P500 opens on a positive note as investors start digesting fears of global economic shakedown due to rising interest rates by central banks. The US Dollar Index (DXY) turns sideways around 105.00 after a stalwart rally. More upside remains favored on hopes that the US economy is approaching to golden path.

Chicago Fed Bank President Austan Goolsbee said the central bank is aiming to push the economy to a “golden path,” meaning a situation where inflation recedes without triggering a recession. While strong wage growth is still a major concern for the Fed as higher disposable income could elevate inflationary pressures.

Meanwhile, investors await the US Consumer Price Index (CPI) data for August, which will be published on Wednesday at 12:30. Investors will keenly watch core inflation data as it has remained extremely stubborn due to strong consumer spending momentum.  

Silver technical analysis

Silver price consolidates below the 61.8% Fibonacci retracement (plotted from August 15 low at $22.23 to August 30 high at $25.00) at $23.30 on an hourly scale. The 50-period Exponential Moving Average (EMA) at $23.13 continues to act as a barricade for the Silver price bulls.

The Relative Strength Index (RSI) (14) shifts into the 40.00-60.00 range from the bearish range of 20.00-40.00, which indicates that the bearish momentum has faded. While the bearish bias has not faded yet.

Silver hourly chart