Silver Price Forecast: XAGUSD dives below $20.00 on risk-aversion as US bond yields climb
|- Silver price drops on high yields as Fed policymakers push back against a dovish tilt.
- US House Speaker Pelosi’s visit to Taiwan turned sentiment sour.
- Silver Price Forecast (XAGUSD): Despite rallying $2 in the last five days, the bias is negative.
Silver price slides due to US Treasury yields rising as Fed officials pushed back markets’ expectations of a US central bank “dovish” pivot, which traders misread. At the same time, geopolitical jitters fueled flows towards safe-haven assets, which boosted the greenback. At the time of writing, XAGUSD is trading at $19.96.
Risk aversion originated from the visit of US House Speaker Nancy Pelosi, which rattled the financial markets. US equities are down, and the greenback is firm, as shown by the US Dollar Index at 106.183, up almost 0.80%. Meanwhile, US Treasury yields soared on Fed speaking, 16 basis points, yielding 2.743%, a headwind for precious metals prices.
XAGUSD drops on high yields and Fed speaking
Unleashed Fed officials have begun to cross wires led by San Francisco Fed President Mary Daly, saying that the Fed is “nowhere near” done in fighting inflation and added that “it would be premature to unwind all of that (Fed tightening) and say the job is done.”
Late in the morning, the Chicago Fed President Charles Evans said that going 50 bps “is a reasonable assessment, but 75 bps could also be okay.”
Loretta Mester, Cleveland’s Fed President, said that she has not seen inflation cool at all and is committed to bringing it under control. She added that she wants to see compelling evidence that inflation is moving down on a sustainable basis.
Data wise, US labor market data, namely JOLTs Job Openings for June, rose to 10.7 million, less than 11 million estimated by the streets. That suggests the labor market is easing amid growing economic pressures.
Silver Price Forecast (XAGUSD): Technical outlook
The XAGUSD illustrates the white metal as neutral-to-downward biased, as the $2 rally losses steam at $20.47, the 50-day EMA, further reinforced by the RSI, which turned down and aims towards the 50-midline. However, XAGUSD bears need a daily close below the $20.00 figure to extend the fall further, leaving silver exposed to selling pressure. If that scenario plays out, silver’s next support would be the 20-day EMA at $19.11. Otherwise, XAGUSD bulls could lick its wound before challenging the 50-day EMA for another time.
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