Silver Price Forecast: XAG/USD battles at $22.00 but fails

Silver (XAG/USD) retraces for the second straight day on rising US Treasury yields. The 10-year benchmark note shows signs of life advancing two-basis points on Thursday after being parked at around 2.750% for the last two days, which is a headwind for precious metals. XAG/USD is currently trading at $21.94, having pulled back from weekly highs at around $22.00 and remains range-bound, with just one day left in the week.

The rise of US Treasury yields begins to weigh on the bright metal after being stationary for two days. At the same time, European and US equities are recording solid gains, reflecting an increase for riskier assets, another factor influencing the fall of precious metals.

The US Dollar Index, which measures the greenback’s value vs. a basket of six currencies, loses 0.22% and sits at 101.843.

The awaited Federal Reserve’s last meeting minutes reinforced what Fed policymakers have said since May 5. The minutes showed that all the board members agreed to 50 bps increases for the next couple of meetings and emphasized the need to move “expeditiously.” Officials stated that moving to a neutral stance was appropriate and added that they are focused on inflationary pressures.

Meanwhile, the US docket featured preliminary readings of the US GDP Q1 for 2022 and reported a contraction of 1.5% YoY. The report blamed the drop on trade dynamics, with US Exports falling at an annual pace of 5.4% in the first quarter while imports increased 18.3%. However, estimates showed healthy growth in consumer spending of 3.1% vs. forecasts of 2.7% YoY. Additionally, the US Department of Labor reported that Initial Jobless Claims for the week ending on May 20 fell to 210K against a 215K expectations.

On Friday, the US docket would unveil the Fed’s favorite measure of inflation, the Personal Consumption Expenditure (PCE), foreseen to rise by 6.4%, three times the US central bank objective.

Silver Price Forecast (XAG/USD): Technical outlook

XAG/USD remails downward biased after failing to trade above the February 3 swing low turned resistance at $22.00. Nonetheless, Silver prices are range-bound and would keep trading within the $21.28-$22.00 area unless a catalyst triggers a break above/below the boundaries.

Upwards, the XAG/USD first supply level would be $22.00. Once cleared, the following resistance would be the May 24 weekly high at $22.20, followed by the February 11 cycle low turned resistance at 22.86. On the other hand, the XAG/USD first support would be the weekly low at $21.67. Break below would expose the May 19 swing low at $21.28, followed by the $21.00 barrier.

Key Technical Levels