Silver is looking into the abyss below the 200-day SSMA

• The price of silver is crossing into a bearish trend as the US dollar picks up a bid to test critical long-term resistance. 
• The US dollar advanced to a nine-month high on Thursday with the US dollar smile theory in play.

XAG/USD is currently trading at $23.27 and down almost 1% on the day having fallen from a high of $23.54 to a low of $23.09. 

As per prior analysis, US dollar bid for its safe-haven status and on central bank divergence, the market is being driven by the performance of the greenback in relation to concerns around the global coronavirus pandemic and rising infections as well as tighter money conditions. 

 On Wednesday, the Federal Reserve July meeting minutes were showing policymakers are considering reducing pandemic-era stimulus this year hit global stocks and commodity-linked currencies.

In other nations and continents, such as New Zealand, Australia and Europe, the narrative is diverging and central banks are less hawkish which is playing into the hands of the US money markets and US dollar bulls. 

In turn, this is weighing on precious metals, particularly silver. 

The gold to silver ratio is higher by almost 0.8% at the time of writing as gold picks up more of a safe haven allure than its sister white metal which tends to outperform in risk-on conditions for its industrial qualities. 

''We have noted that silver has remained particularly vulnerable with reflation peaking ahead of the taper,'' analysts at TD Securities explained. 

''An eventual taper should slow money supply growth, which is a critical driver of the demand for all collectables, including those silver coins that have fueled retail demand for bullion.''

In this regard, all eyes will be on the 26-28 Aug Jackson Hole event where traders will be tuned in for words and forward guidance from the Fed's chairman, Jerome Powell who could announce official timings of tapering. 

However, considering the risks of the delta variant, some anticipate that the Fed would prefer to hold off from anything imminent to allow for some more time to gauge the momentum in the jobs market.  

In any case, the market's focus on when tapering might start, given that it could start in any upcoming month, may very quickly switch to how fast it can be implemented towards the first rate hike.

Analysts at Deutsche Bank noted that ''the minutes showed members wanted to emphasize the decision between tapering and rate hiking would be separate and not dependent on each other.''

''This dovetailed with comments earlier in the day when we heard from St Louis Fed President Bullard, who said that he preferred that tapering were finished by Q1 2022, and that Q4 2022 was a “logical place” for rate hikes to commence.''

In this respect, Kit Juckes, Senior economist at Societe Generale argued, ''perversely, the faster inflation falls and the softer the economic data, the less upward pressure there will be on yields from tapering so the faster they can move to raise rates.''

''Anyway, the best guess is that hiking in H1 is almost impossible, Q3 is hard, Q4 is easier and 2023 is easiest of all,'' Juckes explained. 

''However we slice it, there's a lot of water to flow under the bridge before we get there.''

Silver technical analysis

Silver did not quite make the 50% mean reversion to 24.05 and instead fell from 23.95 to current lows in what could be the makings of a downside continuation.

Silver is crossing into a bearish territory below the 200-day smoothed moving average and bears can target a -272% Fibo retracement of the correction towards 21.57.

With that being said, if bulls break the dynamic trendline resistance, then the 61.% Fibo target guards 25.50/00 structural resistance.