Silver Price Forecast: XAG/USD breaks below $25.50 amid a strong greenback

Silver spot (XAG/USD) slides after last Friday’s “gravestone-doji” in an uptrend, a candlestick pattern meaning “indecision” amongst traders. However, Monday’s price action showed that XAG bears prevailed of late. At the time of writing, XAG/USD is trading at $25.08.

Market sentiment is mixed, and the greenback remains firm

Factors like the Covid-19 outbreak in China, and the Russia – Ukraine conflict, weigh on the market mood. China is placing Shanghai, one of its major cities, in lockdown due to the zero-tolerance restrictions in the country. The Russia-Ukraine war continues as peace talks stagnated, while market players begin to price in a 50-bps increase of the Federal Reserve to its Federal Funds Rate (FFR) in its May meeting, as shown by the CME MarketWatch tool, with the odds at 74% as of March 28, 2022.

That said, the US Dollar Index, a gauge of the buck’s performance against a basket of majors, sits at 99.076, up 0.27%, underpinned by the aforementioned, while US Treasury yields fall. The US 10-year T-note is almost flat in the day at 2.471%, while the yield curve between 5s and 30s inverted during the day, a signal that triggered “recession concerns” in investors.

Aside from this, in the precious metals space, gold also lost some of its brightness, down close to 1%, sitting at $1938.94 a troy ounce.

The US economic docket featured the US Goods Trade Balance for February, which came at $-106.59B better than the $107.57B in January’s deficit. The Dallas Fed Manufacturing for March rose by 8.7, lower than the 11 foreseen, and trailed February’s 14 figure.

XAG/USD Price Forecast: Technical outlook

In the long-term, silver remains upward biased, but in the near term, silver is downward pressured once XAG/USD gave way to Friday’s low at $25.26. Also, once the November 16, 2021, daily high resistance-turned-support at $25.40 was broken, exposed XAG/ÛSD to be trading back in the $24.70-$25.40 area.

That said, XAG/USD’s first support would be $25.00. Breach of the latter would expose $24.88, followed by $24.70.