Silver Price Forecast: XAG/USD fails to conquer $22.00 and tumbles below $21.50
|- Overall, US dollar strength weighed on the precious-metals complex as silver fell in the New York session.
- Fed’s Powell reiterates that the Fed will achieve the inflation target and says they would move “aggressively” to achieve it.
- Silver Price Forecast (XAG/USD): It is downward biased, and as the RSI exits from oversold territory and aims lower, it puts in play a re-test to the YTD lows.
Silver spot (XAG/USD) is losing its ground, and it is falling on Wednesday, recording losses of almost 1%, courtesy of a buoyant greenback and a negative market mood that usually propels precious metals upwards. At $21.46, XAG/USD stays above $21.42, but failure at $22.00 might have opened the door for further losses.
A stronger US dollar and a “hawkish” Powell weigh on XAG/USD prices
The US Dollar Index, a gauge of the greenback’s measurement against a basket of six peers, is advancing some 0.42% in the day, sitting at 103.727, a headwind for XAG/USD. Contrarily, falling US Treasury yields, led by the 10-year benchmark note, are retreating ten basis points, sitting at 2.887%, which would usually hurt the buck and are being ignored by investors.
Another factor to consider is Fed Chair Jerome Powell’s Q and A event, held on Tuesday by the Wall Street Journal. Powell said that the Fed “needs to see” that inflation is coming down in a “clear and convincing way, and we’re going to keep pushing until we see that. If that involves moving past broadly understood levels of ‘neutral,’ we won’t hesitate at all to do that.” Furthermore, Powell added that if the US central bank fails to see that, “then we’ll have to consider moving more aggressively.”
Elsewhere, the US docket featured Building Permits and additional housing data, which came mixed. Building Permits rose higher than foreseen, but Housing Starts missed expectations as the US economy began to show signs of the Federal Reserve tightening.
Philadelphia’s Fed Patrick Harker would cross wires late in the day, followed by Thursday’s Initial Jobless Claims.
Silver Price Forecast (XAG/USD): Technical outlook
Meanwhile, XAG/USD’s price action depicts that the white metal bias is still downwards. As above-mentioned, the $22.00 barrier proved challenging to overcome, and with bears re-entering the market and the Relative Strength Index (RSI) at 34.76 aiming lower, a re-test towards the YTD lows at around $20.45 is on the cards.
With that said, the XAU/USD’s first support would be $21.00. A breach of the latter would expose the May 16 daily low at $20.84, followed by May 12 lows at $20.61, and then the YTD low at $20.45.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.