• Silver scales higher for the third successive day and touches a fresh weekly high on Thursday.
• The formation of a rectangle on the daily chart warrants caution before placing directional bets.
• The technical setup, however, favours bulls and supports prospects for an eventual breakout.

Silver builds on this week's move up from sub-$23.00 levels and gains some follow-through traction for the third successive day on Thursday. The white metal steadily climbs to $24.30 horizontal resistance during the early European session and moves well within the striking distance of the multi-month top touched in January.

Looking at the broader picture, the XAG/USD has been oscillating in a familiar trading range over the past one-and-half month or so. The price action, meanwhile, constitutes the formation of a rectangle on the daily chart and points to indecision among traders. This, in turn, warrants caution for aggressive traders and before positioning for a firm near-term direction.

That said, positive technical indicators on the daily chart favour bulls and support prospects for an eventual breakout to the upside. A sustained strength beyond the trading range resistance, around the $24.50-$24.55 region, will reaffirm the constructive outlook. The XAG/USD might then aim to reclaim the $25.00 psychological mark for the first time since April 2022.

Some follow-through buying has the potential to lift the XAG/USD towards the next relevant hurdle near the $25.35 region en route to the $26.00 round figure.

On the flip side, the $24.00 mark now seems to protect the immediate downside. Any subsequent pullback might continue to attract some buyers near the $23.50-$23.45 region, below which the XAG/USD could slide to the $23.00 level. This is followed by support near the $22.75 region, which if broken decisively will expose the next relevant support near the $22.20-$22.15 zone.

Silver daily chart

Key levels to watch