Silver Price Analysis: XAG/USD retreats below $22.70 amid rising US yields

On Friday, the XAG/USD saw mild losses and will post its fourth consecutive weekly loss, having lost more than 7% since mid-July. At the end of the week, the US reported hot Producer Price Index (PPI) data and positive University of Michigan (UoM) Sentiment and inflation expectations, which fueled a rise in US bond yields.

After the release of key inflation data throughout the week, American rates are rising. The 10-year bond yield reached 4.16%, up by 1.34%. The 2-year yield stands at 4.89% with a 1% increase, while the 5-year yield is at 4.30% with 1.75 % gains. It's worth noting that American yields tend to be negatively correlated with non-yielding precious metals, so they may limit the XAG/USD’s upside for the rest of the session.

Overall, inflation saw this week the headline and core Consumer Price Index (CPI) coming lower than expected in July, while the PPI rose to 2.4% higher than expectations. The pace for the metal and bond markets in the next session will be determined by the market's assessments of the economic situation in the US and how it will affect the next Federal Reserve (Fed) decisions. As for now, the stronger case is that more hikes will be seen in this tightening cycle, but as Jerome Powell stated, it will all depend on the incoming data.

XAG/USD levels to watch

The technical analysis of the daily chart points to a neutral to a bearish outlook for XAG/USD, indicating the potential for further bearish movement. The Relative Strength Index (RSI) displays a flat slope below the 50 middle points, while the Moving Average Convergence (MACD) lays out weaker red bars. Furthermore, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), highlighting the continued dominance of bears on the broader scale, requiring the buyers to take action. Traders should eye the 20 and 100-day averages as they are about to perform a bearish cross which could exacerbate the downside in the near term.

Support levels: $22.50, $22.30, $22.00. 

Resistance levels:  $23.25 (200-day SMA), $23.50, $23.70, $24.05 (a bearish cross between the 20 and 100-day SMA).

XAG/USD Daily chart