Silver Price Forecast: XAG/USD breaks above the 100-DMA, around $24.40 amid falling Real Yields
|- XAG/USD advances for the third day in a row, above the 100-DMA.
- Fed Vice-Chairman Clarida: The benchmark for higher rates could be met by the end of 2022.
- Fed Vice-Chairman Clarida: The Fed is still “a ways away” from lifting off rates.
- XAG/USD: Bull’s target is $24.60 before launching an attack towards $25.00.
Silver (XAG/USD) advances sharply for the third consecutive day, up some 1.05%, trading at $24.40 during the New York session at the time of writing. Further, it is printing a two-week high amid higher US T-bond yields, with the 10-year Treasury yield at 1.49%, up near four basis points in the session.
Silver rises, boosted by falling Real Yields
Usually, higher US Treasury yields have an inverse correlation with precious metals like gold or silver, but as of writing what it is influencing, the jump in XAG/USD is real yields. As noted by Joel Frank, FX Street analyst, in its article Gold Price Analysis: XAU/USD hits two-month highs above $1820 as real yields decline, he commented that “US real yields, which saw a sharp fall last week, continue to head lower on Monday, with the 10-year TIPS yields down roughly 2bps on the session and back below -1.10%.” Real yields it’s the interest rates minus inflation, though as TIPS yields drop lower, investors could expect higher prices on precious metals. Furthermore, US inflation expectations are edging higher, thus increasing the appetite of precious metals as an inflation hedge.
In the meantime, the US Dollar Index, which tracks the greenback’s performance against a basket of six peers, is down 0.14%, sitting at 94.08, boosting the appetite of the non-yielding metal.
During the day, some Fedspeakers crossed the wires. One of the most relevant, Vice-Chairman Richard Clarida, said that the benchmark for higher rates could be met by the end of 2022 but reiterated that the Fed is still “a ways away” from lifting off rates, per Reuters. Further noted that “Core PCE inflation measured since Feb. 2020, before the pandemic, through Sept. 2021 already averaging 2.8%.”
XAG/USD Price Forecast: Technical outlook
In the daily chart, XAG/USD just broke the 100-day moving average (DMA) at $24.16, closing to the mid-line of Andrew Pitchfork’s indicator around the $24.60 area. A daily close above the latter could propel the white-metal towards higher prices, being the September 5 high at $24.85, its first resistance level. A sustained break above that level would expose the 200-DMA at $25.35.
On the other hand, failure at Pitchfork’s central line would expose the 100-DMA as the first support, followed by the $24.00 figure.
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