Silver Price Forecast: XAG/USD taps $42.00 for the first time since September 2011

• Silver scales higher for the third straight day and touches a fresh multi-year high on Friday.

• A slightly overbought daily RSI warrants caution before positioning for any further upside.

• Any corrective slide could be seen as a buying opportunity and is likely to remain limited.

Silver (XAG/USD) rallies to a fresh high since September 2011 during the Asian session on Friday, with bulls looking to build on the momentum beyond the $42.00 round figure.

From a technical perspective, the white metal is currently placed near the top boundary of the month-to-date (MTD) ascending trend-channel. A sustained strength beyond will mark a fresh breakout and set the stage for an extension of the recent well-established upward trajectory. However, a slightly overbought daily Relative Strength Index (RSI) makes it prudent to wait for some near-term consolidation before positioning for any further gains.

Nevertheless, the XAG/USD remains on track to register gains for the fourth successive week and climb further towards testing the next relevant hurdle near the $42.65 region. The momentum could extend further towards reclaiming the $43.00 round-figure mark en route to the September 2011 swing high, around the $43.40 region.

On the flip side, the Asian session low, around the $41.40 area, now seems to protect the immediate downside. Any subsequent slide might be seen as a buying opportunity, which should help limit the downside for the XAG/USD near the $41.00 mark. The latter represents a confluence – comprising the lower end of the aforementioned channel and the 200-hour Simple Moving Average (SMA) - and should act as a near-term base for the commodity.

A convincing break below, however, might prompt some technical selling and drag the XAG/USD to the $40.55-$40.50 support zone. The white metal could weaken further towards the $40.00 psychological mark before eventually dropping to mid-$39.00s.

Silver 1-hour chart