Silver Price Forecast: XAG/USD dips below $66.00 and hints at a bearish “H&S”

Silver (XAG/USD) moved lower on Monday, touching session lows around $65.46 after Friday's reversal from the $68.00 area. Precious metals came under pressure after stronger-than-expected US Nonfarm Payrolls boosted expectations for a Federal Reserve rate hike in September.

US employment increased by 162K in August versus the 57K market forecast, easing concerns about labor-market weakness. The stronger data lifted market expectations for a 25-basis-point Fed hike at the September 15-16 meeting, increasing pressure on non-yielding assets such as silver.

The next major catalyst is the US Consumer Price Index release. A firmer inflation reading could strengthen the case for tighter Fed policy, while softer inflation could ease rate-hike expectations and potentially provide relief for precious metals.

Technically, XAG/USD remains in a bearish near-term setup below the 200-day simple moving average. Friday's rejection near $68.00 resembles a possible second shoulder of a bearish Head & Shoulders formation, while the daily MACD remains negative. The RSI near 52 suggests momentum is not yet deeply oversold.

On the downside, Friday's low near $64.75 is an initial support area. The key level is $63.30, the September 2 low; a decisive break below this neckline area would strengthen the H&S setup and expose the August 6 low near $61.00.

On the upside, resistance is seen around $67.50, followed by the mid-June highs near $71.60. The 200-day SMA around $72.90 would remain a major hurdle for a sustained bullish recovery.