XAG/USD rallies above $21.50 on lower US Treasury yields

  • The white metal rebounded more than 2% on the day amid falling US Treasury yields.
  • Sentiment improved during the session, a headwind for the greenback.
  • Silver Price Forecast (XAG/USD): The bears take a breather and rally around $22.00, expecting to defend this resistance level.

Spot silver (XAG/USD) has held firm over the past two trading days and is making solid progress in the North American session, up nearly 2%, and closing around the 21.50 mark $, boosted by falling US Treasury yields. At the time of writing, XAG/USD is rising sharply and trading at $21.53.

Silver Soars as US Treasury Yields Fall; Fed Chairman Powell will speak on Tuesday

Meanwhile, US Treasury yields remain under pressure, led by the benchmark 10-year note at 2.879%, down four and a half basis points, a headwind for the greenback. The US Dollar Index, an indicator of the value of the dollar against a basket of peers, is falling sharply from daily highs and stands at 104.367, down 0.19%.

Towards the end of the New York session, market sentiment turned positive, despite European stocks ending with losses. Despite growing investor fears that an aggressive Federal Reserve could trigger a recession, US stocks recorded gains during the day. The above, alongside China’s struggles with Covid-19 lockdowns, threatens to derail the global economic recovery.

Earlier in the New York session, New York Fed President John Williams said the number one problem for the Fed is inflation, and that it is way too high and stubbornly persistent. Williams said 50 basis point rate hikes would make sense in upcoming meetings

The U.S. economic record would feature an additional Fed speech led by Fed Chairman Jerome Powell on Tuesday. In terms of macro data, April retail sales, industrial production, building permits and initial jobless claims would shed some light on the real economic situation in the United States.

Silver Price Prediction (XAG/USD): Technical Outlook

XAG/USD remains trending lower, despite the rally over the past two days. The daily moving averages (DMA) are still above the spot price, meaning the bears are in control unless the silver bulls conquer the February 3rd pivot low at around $22.00, which would mean that the trend would change from bearish to neutral-bearish.

However, the jump from the relative strength index (RSI) oversold territory at 35.04 could add some support to the rebound from the year-to-date lows around $20.45, but unless Unless it breaks the RSI trendline drawn around the 50 midline, XAG/USD remains under downward pressure.

That said, the first support for XAG/USD would be $21.00. A break below would expose the year-to-date low of $20.45. Once cleared, the next support would be July 17, 2020, at a daily low at $18.93.

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