Silver Price Forecast: XAG/USD slides back closer to mid-$31.00s; down nearly 1% for the day

• Silver drifts lower on Wednesday, though the mixed technical setup warrants caution for traders.
• The recent repeated failures to breakout through a descending channel resistance favor bears.
• The formation of a bullish flag pattern supports prospects for the emergence of some dip-buying.

Silver (XAG/USD) extends the previous day's retracement slide from the $33.20-$33.25 resistance zone and attracts some follow-through selling during the Asian session on Wednesday. The white metal drops to a fresh daily low, around the $31.60 area in the last hour, though the mixed technical setup warrants caution before positioning for deeper losses.

Against the backdrop of a goodish recovery from the $28.45 area, or the year-to-date trough touched in April, the recent price action along a three-week-old descending channel constitutes the formation of a bullish flag pattern. However, the overnight failed attempt to breakout through the trend-channel resistance makes it prudent to wait for a sustained move beyond the $33.25 barrier before positioning for any meaningful upside amid slightly negative oscillators on hourly/daily charts.

The XAG/USD might then accelerate the positive move towards the $33.70 intermediate hurdle before aiming to reclaim the $34.00 round-figure mark. Some follow-through buying will set the stage for a further near-term appreciating move towards the March monthly swing high, around the $34.55-$34.60 region.

On the flip side, weakness further below the $32.40 immediate support could make the XAG/USD vulnerable to slide back to sub-$32.00 levels, or the weekly low touched on Monday. This is followed by the $31.70 region, or the monthly low, below which the white metal could aim to challenge the descending channel support, currently pegged around the $31.35 area. A convincing break below the latter will be seen as a key trigger for bears and pave the way for deeper near-term losses.

Silver 4-hour chart