XAG/USD rallies above $22.00 on falling US bond yields, ahead of US NFP

  • Silver (XAG/USD) shed some weekly losses and rallied almost 2.80% in the past two days.
  • Risky market sentiment weighed on US Treasury yields and the US dollar, pushing precious metals higher.
  • Silver Price Prediction (XAG/USD): To extend its gains towards $23.00.

Silver (XAG/USD) hit new weekly highs above $22.00 amid bullish market sentiment that weighed on the safe-haven US Dollar, also undermined by US Treasury yields, in particular the benchmark 10-year note rate, almost stable at 2.911%. At the time of writing, XAG/USD is trading at 22.38.

Market sentiment has improved as seen with US stocks posting gains, while Asian stocks are poised for a higher open. Investors put aside worries about a possible recession in the United States, stimulated by the aggressive tightening path of the United States Federal Reserve, while evaluating the current coronavirus crisis in China, which has eased some restrictions, while it is fighting to achieve the 5% growth target by the end of 2022.

In addition to the above, the three-month-long conflict between Ukraine and Russia has started to weigh on food and commodity prices.

Elsewhere, the parade of Fed speakers continued. Cleveland Fed Chair Loretta Mester said she supports 50 basis point increases in the next two meetings and added that the Fed is well positioned to consider the appropriate pace for further rate hikes.

Mester added that she did not know how far rates were expected to rise and that a pause in the tightening cycle would depend on the data. Nonetheless, she pointed out that the Fed would slam on the brakes if inflation remained stubbornly high, and she is still maintaining rate hikes of 25 or 50 basis points, unlike a pause in September.

Earlier Thursday, Fed Vice Chairman Lael Brainard said the central bank was getting mixed signals on the economy and the number one challenge was to bring inflation down. Asked about a Fed pause, she said it was harder to say because policy was not on a predefined path via CNBC.

In the meantime, the U.S. Calendar would release May’s Nonfarm Payrolls, ISM Nonmanufacturing, and Composite PMI report, along with other Fed speakers, before the committee meeting blackouts. the Federal Reserve’s open market in June.

Silver Price Prediction (XAG/USD): Technical Outlook

XAG/USD rose sharply and broke through the $22.00 mark. Additionally, the Relative Strength Index (RSI) has moved into positive territory due to the size of the move, meaning the rally still has a few steps to go before turning south. Also, it should be noted that the first level of resistance in XAG/USD is the confluence of the 50-DMA and the May 5 high, rising to $23.26-28, respectively. A violation of the latter could pave the way for further gains. The next supply zone for XAG/USD would be 200-DMA at $23.51, followed by 100-DMA above all DMAs at $23.72.

Key technical levels

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