Silver Surges Toward $70 Amid Ongoing USD Weakness

XAG/USD technical analysis

Silver (XAG/USD) continued its upward momentum on Friday, trading near $69.75, a 2.41% increase for the day. The precious metal hit its highest level in two months and is poised for a weekly gain exceeding 7%, driven by continued weakness in the U.S. dollar.

The primary driver of this week’s rally is the U.S. Treasury’s unexpected announcement of an expanded debt‑buyback initiative. The Treasury intends to at least double its purchases of longer‑dated government securities to curb borrowing costs. This move initially sparked a rapid decline in Treasury yields and the dollar, thereby boosting the attractiveness of dollar‑priced precious metals.

Although Treasury yields have partially rebounded, the recovery is insufficient to stop silver’s advance. Investors are increasingly concerned about the longer‑term fiscal outlook, including rising government debt, substantial budget deficits, and the potential for policymakers to prioritize looser financial conditions at the expense of the U.S. currency.

Commerzbank notes that the Treasury’s action signals a preference among U.S. authorities for a weaker dollar rather than enduring persistently higher long‑term interest rates. This viewpoint further undermines the greenback and continues to lift silver.

The monetary‑policy environment also supports the metal. Recent U.S. employment and inflation data have reduced expectations for an imminent Federal Reserve rate hike. Lower interest rates tend to favor non‑yielding assets like silver while exerting additional pressure on the dollar.

Market participants are now focusing on the preliminary August S&P Global Purchasing Managers Index (PMI) releases. Consensus forecasts anticipate the Manufacturing PMI easing slightly to 53.8 from 53.9 in July, while the Services PMI is expected to dip to 54 from 54.6. Weaker‑than‑expected readings could intensify dollar weakness and further support silver.

Nonetheless, inflation risks remain. Escalating oil prices amid Middle‑East tensions may keep U.S. inflation elevated, reigniting speculation about a Fed rate increase and bolstering the dollar. A sustained rise in Treasury yields could also serve as a headwind for precious metals following their recent strong performance.

XAG/USD technical analysis

On the one‑hour chart, XAG/USD is trading at $69.83, maintaining a near‑term bullish bias as the price holds above the upward‑sloping trend‑line support near $68.03 and comfortably above the 100‑period simple moving average ($66.02) and the 200‑period SMA ($65.56). The clustering of key levels around $67.75 and $66.60 reinforces a constructive structure, while the Relative Strength Index (RSI) of 70.05 suggests mildly overbought conditions that may temper, rather than reverse, the upward move.

Looking ahead, immediate resistance looms around the round $70.00 psychological level; a sustained breakthrough could pave the way for further gains in the short term. On the downside, the first notable support rests near the reclaimed trend‑line zone around $68.03, followed by horizontal supports at $67.75 and $66.60, with the 100‑period SMA ($66.02) and the 200‑period SMA ($65.56) offering deeper trend support should corrective pressure intensify.

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