Silver Price Forecast: XAG/USD steadies near $38.50, eyes breakout above $39.00

• Silver is trading around $38.50 on Monday, recovering from last week's mild pullback.
• Momentum indicators on the hourly chart suggest an upside bias, with the RSI near 70 and the ADX turning higher.
• Immediate key resistance is seen at the $39.00 psychological level and the July 14 high of $39.13, while support is located at the $38.00 round number and the $37.50 demand zone.

Silver (XAG/USD) starts the week on firmer ground after a mild pullback last week. As of now, the metal is trading near $38.50 during the early American trading hours on Monday, just shy of the multi-year high of $39.13 set on July 14. Although the recent rally has lost some momentum, technical indicators are turning bullish again across both short-term and longer-term charts.

The rebound is also supported by a softer US Dollar, which is trading under pressure on Monday amid easing Treasury yields and cautious risk sentiment.

On the hourly chart, Silver is showing signs of renewed strength after forming a local bottom near $37.50, following a break above a descending trendline. The spot price now holds above the 21-period Exponential Moving Average (EMA) at $38.35. The moving average is sloping upward and acting as dynamic intraday support, indicating fresh buying interest.

Momentum is also firming up. The Relative Strength Index (RSI) has climbed into the overbought zone near 70, reflecting strong bullish momentum. While slightly stretched, the setup remains constructive as long as the RSI holds above 60. Meanwhile, the Average Directional Index (ADX) is pointing north currently at 20, hinting at a possible strengthening in trend momentum. However, a confirmed breakout above the $38.70-$39.00 resistance band could quickly ignite a stronger directional push.

Key short-term levels:

• Resistance: $39.00 psychological zone followed by $39.13 July 14 high.
• Support: $38.00 round number, $37.50 demand zone, and 21-EMA at $38.33

Zooming out to the daily chart, Silver remains firmly embedded in an uptrend, supported by a clearly defined ascending channel that has held since early April. The recent rally to $39.13 shows strong buying interest in Silver, supported by ongoing economic uncertainty and global tensions.

Despite last week's modest pullback from multi-year highs, the broader structure remains intact. Silver continues to trade comfortably above the 21-day EMA at $37.18 and the 50-day EMA at $35.92--both serving as solid dynamic support and aligning with the lower boundary of the rising channel.

The RSI is approaching the overbought zone, currently at 68, suggesting buyers are regaining control. At the same time, the ADX has edged up to 19.92, indicating that the current move lacks trend strength for now. As long as Silver holds above the $37.00-$37.50 region, the broader bullish bias remains intact. A decisive breakout above $39.13 could pave the way for a run toward the key psychological barrier at $40.00.