- Silver price revives downside move as US bond yields drop sharply.
- US bond yields weaken as market speculation for Fed reducing interest rates in September improves.
- The next move in the US Dollar will be guided by the US ISM Manufacturing PMI for May.
Silver price (XAG/USD) recovers strongly after discovering buying interest near the crucial support of $30.00 in Monday’s New York session. The white metal bounced back as US Treasury yields plunge du to slight improvement in market speculation for the Federal Reserve (Fed) to begin reducing interest rates from the September meeting.
The CME FedWatch tool shows that the probability of a rate-cut decision in the September meeting has increased to 52% from 49% recorded a week ago. This has weighed heavily on US Treasury yields. 10-year US bond yields have declined to 4.46%. Lower yields on interest-bearing assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Silver.
Some improvement in the Fed rate-cut expectations was driven by downwardly revised Q1 United States (US) Gross Domestic Product (GDP) estimates to 1.3% and weak Personal Spending data for April.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, retreats to 104.50.
Going forward, investors will focus on the US ISM Manufacturing PMI data for May, which will be published at 14:00 GMT. The PMI is estimated to have improved to 49.8 from the former reading of 49.2. However, a figure below the 50.0 threshold Itself suggests contraction.
Silver technical analysis
Silver price trades in a Rising Channel chart pattern formed on a four-hour timeframe in which each pullback move is considered a buying opportunity by market participants. The white metal comes under pressure as it drops below the 50-period Exponential Moving Average (EMA), which trades around $31.00.
The 14-period Relative Strength Index (RSI) shifts into the bearish range of 20.00-40.00, suggesting that the momentum has leaned towards the downside.
Silver four-hour chart
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