Silver Price Forecast: XAG/USD sheds 1%, yet is poised for weekly gains

• XAG/USD drops over 1% to $31.60 after reaching a yearly high of $32.71 earlier in the week.
• Failure to close above $31.75 could see Silver trading between $31.00 and $31.70, with potential for further weakness.
• A break above $32.00 may lead to retesting the YTD high of $32.71, with $33.00 as the next key resistance level.

Silver prices dropped on Friday, finishing the session down by more than 1% after hitting a yearly record high of $32.71 on September 26. Buyers' failure to cling to gains above $32.00 exacerbated the drop toward $31.60, but they held to weekly profits of over 1.50%.

XAG/USD Price Forecast: Technical outlook

Silver is upward biased amid dipping to a four-day low of $31.37, but a daily close below the July 13 peak of $31.75 opens the scope to trade within the $31.00-$31.70 range.

The Relative Strength Index (RSI) remains bullish, but in the short term, sellers could push prices toward the September 23 low of $30.36. On further weakness, the next stop would be the 50-day moving average (DMA) at $29.64.

Conversely, if XAG/USD climbs back above $32.00, this could pave the way to test the YTD high of $32.71 before challenging $33.00 ahead of the October 1, 2012, peak at $35340.

XAG/USD Price Action - Daily Chart