If the price rebounds from $50 and breaks $60, it will likely confirm a bottom. This confirmation may likely set the rally to $72. A break above $72 may push silver to $90. For silver prices to produce a bottom, the US dollar index must produce a high. If the US dollar index breaks below 100.50, it will likely increase the likelihood of bottom in silver.
What to Watch Next
The interest rate decision by the Fed on 28 October will be the key test for silver prices. This decision will provide further clues about the guidance on interest rates in December. A strong focus on inflation may support the US dollar and keep the silver price under pressure.
Moreover, the surge in Brent oil last week near $120 also fuels the expectation of higher inflation. These expectations may keep the expectation of rate hike in December. The correction in oil prices and US Treasury yields may ease the pressure on silver prices.
Silver is now approaching the major support zone of $48-$50. A rebound from this support zone may trigger a rally in silver prices back to $60. A break above $60 will open the way for a move to $72. The market may watch the US dollar movements near 100.50. A break below 100.50 will suggest a negative trend in the index which may fuel a rally in silver prices from the support zones. In my view, if the US dollar breaks 100.50 and silver prices recover above $60, it will increase the expectations of major bottom in the silver market.
Read more: Gold Tests $4,000 and Silver Remains Under Pressure as Oil Surges