Silver Price Analysis: XAG/USD stabilises in $24.80 area despite more US equity market/bond yield upside

Spot silver (XAG/USD) prices have stabilised in recent trade in the $24.80 area having dipped as low as the $24.50s earlier in the day, despite global equities and bond yields continuing to push higher, usually a double whammy for precious metals. In fairness, XAG/USD prices are still trading down by about 1.5% on the day. But it appears that against the backdrop of still very much elevated energy and other commodity prices (that is keeping stagflation fears alive), the bears werent yet ready to push the precious metal below last week’s lows in the $24.50 area.

Indeed, geopolitical risks remain elevated as the Russo-Ukraine war rumbles on and Western leaders sound the alarm about potential Russian chemical weapons attacks that could be used to break the current deadlock. Such a move would further accelerate the imposition of ever-harsher Western sanctions on Russia, with the EU now leaning towards a blanket Russian oil import ban. But this week’s further hawkish shift from Fed Chair Jerome Powell who stoked expectations that the Fed might hike rates by more than 25bps at upcoming meetings seems to have overridden geopolitical concerns for now.

Indeed, there has been a lot of focus on the recent resultant sharp upside seen across US and global yields, which has increased the opportunity cost of holding non-yielding assets like silver. Should recent upside yield moves continue, and should risk appetite in the equity space also remain healthy as has (to the surprise of many) been the case over the past week or so, a bearish break in XAG/USD is likely. The next major support below $24.50 is the 200 and 50-Day Moving Averages in the $24.00 area.