• Silver prices resume their bullish trend to hit four-month highs at $21.65.
• US dollar weakness boosts precious metals.
• The pair needs to consolidate above $21.30/50 resistance area.

Silver prices resumed their rally on Tuesday, following a moderate pullback on Monday, with the white metal stretching above the $21.30 resistance area to reach fresh four-month highs at $ 21.65

Precious metals appreciate as the US dollar dives

In the absence of relevant macroeconomic data and with the US elections in the spotlight, precious metals have rallied during the North American session. US Treasury bonds have reacted with declines to the first polls pointing out to a Republican victory, dragging down the US dollar with them.

The US Dollar Index has turned lower after having appreciated moderately during the Asian and European trading sessions, extending its reversal from last week's highs at 113.15 to six-week lows at 109.30 area.

A republican takeover is highly likely to lead to a Congress gridlock and block the stimulus measures projected for 2023. This would ease the Federal Reserve’s pressure to keep hiking rates at the current pace, which has brought the idea of the dovish pivot, back to the table.

XAGUSD is struggling at the $21.30 resistance area

Silver prices are now attempting to consolidate above the $21.30/50 resistance area where the October 4 high and the 38,2% Fibonacci retracement level of the March-August decline meet the 200-day SMA>

Above here, the next potential targets would be mid-June highs at $21.90 ahead of the 50% Fibonacci level, at $22.45.

The pair, however, has reached overbought levels in hourly and daily charts, which anticipates the possibility of a moderate pullback before further rally should be contemplated.

Immediate support lies at the intra-day level of $20.60, ahead of the $20.00 round level and the 50 and 100-day SMAs at $19.30/50.

XAGUSD daily chart

Technical levels to watch