Silver forming bullish flag as $26.00 continues to provide a floor

• XAG/USD is forming a bullish flag as it remains supported above the $26.00 level.
• The precious metal also continues to consolidate within a longer-term pennant.

Spot silver (XAG/USD) prices were choppy on Tuesday, closing the session with modest losses of around 0.1% or just over 3 cents after prices swing between the $26.00 level, which twice acted as support, and the $26.50 level.

Broader markets were choppy and mixed; US equities and the US dollar finished the session in the red while crude oil finished the session in the green. The lack of any clear direction was seen across precious metals markets and is perhaps unsurprising as markets wait to see what will happen with US fiscal stimulus and the Georgia run-off election on 5 January. Year-end portfolio rebalancing flows amid thin market conditions (many participants still away for Christmas and New Year’s celebrations) are another factor to consider that might distort the price action over the coming weeks.

XAG/USD forms a bullish flag

XAG/USD prices have been forming a bullish flag, with the pole being the spike higher seen during Monday’s Asia Pacific session that saw prices reach as high as $26.80. As noted earlier, XAG/USD is also consolidating within a longer-term pennant. If a break occurs to the upside of this short-term bullish flag, a move back to weekly highs around $26.80 and then onto last week’s highs loser to $27.50 is on the table.

XAG/USD four hour chart