Silver Price Forecast: XAG/USD advances firmly towards $22.50 despite higher US bond yields

Silver (XAG/USD) advances during the New York session, paring Monday losses, trading at $22.54 at the time of writing. Financial market upbeat sentiment, attributed to reports that COVID-19 omicron variant cases only causes mild symptoms, spurred a rally on US stocks, the biggest since March. Also, Glaxo’s development of antibody treatment for COVID-19 showed that it is effective against the new coronavirus strain, abating investors’ worries of an economic slump.

The greenback rises, courtesy of higher US bond yields

In the meantime, US equities are printing gains while US bond yields are up. The 2s are rising four basis points up to 0.6792%, while the 10-year benchmark note is up to three basis points, sitting at 1.467%, a tailwind for the greenback. The US Dollar Index, which measures the buck’s performance against six peers, is up 0.11%, currently at 96.43.

Last week, Fed’s Chair Jerome Powell, alongside some US central bank policymakers, expressed that a faster bond-taper would be needed due to elevated prices. In fact, Chair Powell said that the word “transitory” has to be removed when speaking about inflation, reflecting that it is stickier than expected. That keeps XAG/USD traders focused on the Consumer Price Index for November, to be revealed on Friday.

In the overnight session, the white metal remained subdued, in a $22.23-47 range, fluctuating between the 100 and the 50-hour simple moving averages (SMA’s). In the last three hours or so, silver broke to the upside and left both previously mentioned SMA’s under the spot price at $22.39 and $22.38, respectively. Nevertheless, it failed to break above solid resistance at the December 6 high at $22.58, retreating towards $22.40s

XAG/USD Price Forecast: Technical outlook

Silver (XAG/USD) in the 1-hour chart depicts a bullish bias, attributed to the 1-hour 50 and 100-simple moving averages (SMA’s) residing below the spot price. Despite that fact, the non-yielding metal faces strong resistance at press time, at the confluence of the R1 daily pivot and the December 6 high at $22.58, a strong line of defense of USD bulls.

In the outcome of breaking to the upside, the first resistance would be $22.80, immediately followed by $23.00.

On the flip side, the first support would be the central daily pivot at $22.35. A break below that level would expose crucial support levels, as the S1 daily pivot at $22.10, followed by the psychological $22.00.