Silver, represented by XAG/USD, has garnered fresh buying interest at the start of the new week, halting its retracement from the recent highs near the $29.80 region, the highest level since February 2021 reached on Friday. The white metal has maintained its intraday gains during the early European session, hovering just below the mid-$28.00s.
Technically, the recent breakout above the $25.60-$25.70 horizontal resistance level has acted as a catalyst for bullish traders. However, caution is warranted as the Relative Strength Index (RSI) on the daily chart indicates overbought conditions, suggesting a potential need for near-term consolidation or a modest pullback before further upward movement.
In the event of a corrective decline, initial support is anticipated near the $28.00 round figure, with stronger support likely in the $27.80-$27.75 region. Further downside momentum could see XAG/USD testing support levels at $27.25 and potentially $27.00. Deeper declines might encounter support around the $26.35-$26.30 range before targeting the $26.00 mark and the $25.70-$25.60 resistance-turned-support zone.
Conversely, sustained strength above the $28.50 level could pave the way for a retest of the $29.00 mark. Continued momentum may propel prices towards the $29.80 zone, representing the year-to-date peak, with a potential target of surpassing the psychological barrier at $30.00. Bulls will aim to consolidate above these levels to solidify their control over the market.
