Silver Price Analysis: XAG/USD holds steady above $28.00, not out of the woods yet

• Silver builds on last week’s modest bounce from the lowest level since May 9.
• The technical setup warrants caution before positioning for any further gains.
• The $27.45 area, or the multi-month low, is the last line of defence for bulls.

Silver (XAG/USD) trades with a positive bias for the second straight day on Monday and moves further away from its lowest level since May 9 touched last week. The white metal currently trades just above the $28.00 mark, up over 0.50% for the day, though the technical setup warrants some caution before positioning for any further appreciating move.

Last week's sustained breakdown through the $28.65-$28.60 horizontal support or the June swing low, which coincided with the 100-day Simple Moving Average (SMA), was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding in negative territory and are still far from being in the oversold zone. This suggests that the path of least resistance for the XAU/USD is to the downside and supports prospects for the emergence of fresh selling at higher levels. 

Hence, any subsequent move up is more likely to attract fresh sellers and remain capped near the $28.55-$28.60 zone, or the 100-day SMA support breakpoint. The said area should now act as a key pivotal point, which if cleared decisively might trigger a short-covering rally and allow the XAG/USD to reclaim the $29.00 round-figure mark. The momentum could extend further towards the next relevant hurdle near the $29.40-$29.45 supply zone, coinciding with last week's swing high. 

On the flip side, the $27.45 region, or the multi-month low set last Thursday, now seems to act as an immediate strong support. Some follow-through selling will reaffirm the near-term negative outlook and make the XAG/USD vulnerable to accelerate the fall to the $27.00 mark. The white metal could weaken further below the $26.60-$26.55 intermediate support and eventually drop to the very important 200-day SMA support, currently pegged just below the $26.00 round figure.

Silver daily chart