Silver Price Analysis: XAG/USD drops below $24.00 in sharp pullback as dollar strengthens

• Spot silver prices have pulled back sharply below the $24.00 level in recent trade, despite gold prices remaining resilient.
• The recent bout of selling pressure has seen XAG/USD hit its lowest levels since last Wednesday.
• Technicians are eyeing a test of support in the $23.70 and $23.40 areas.

Spot silver (XAG/USD) prices have been choppy in recent trade, with prices recently collapsing back to the south of the $24.00 level and towards $23.80, with the precious metal now trading lower by about 2.0% on the day. Silver is seeing divergence with spot gold on Monday, with the latter seemingly catching a bid amid safe-haven demand as a result of geopolitical concerns whilst the former fails to do so. Silver could be suffering as a result of a broadly stronger US dollar, which as (like gold) has been gaining on safe-haven grounds.

Either way, the recent bout of selling pressure has seen XAG/USD hit its lowest levels since last Wednesday. The bears will be eyeing support in the form of the 24, 25 November highs in the $23.70 area ahead of a potential retest of the late December highs in the $23.40 area. If silver does hit these levels, a big question will be whether the recent pullback has been sufficient to attract dip-buyers.

Ahead of this week’s Fed meeting, which is unanimously expected to be a very hawkish affair, the appeal of interest-rate-sensitive assets (such as precious metals) may be somewhat limited. Geopolitics and over-arching risk appetite will of course also be important drivers of silver this week, and US data in the form of Q4 GDP and December Core PCE inflation will be worth watching.