Silver Price Forecast: XAG/USD climbs above $18.60 amid a soft US Dollar, high US bond yields

Silver price bounces off weekly lows around $18.20s and climbs to the $18.70 area amidst elevated US Treasury yields. The US Dollar could not capitalize on the hawkish rhetoric of Philadelphia’s Fed Patrick Harker, while US economic data was mixed.

Silver climbs despite Fed’s hawkish commentary and mixed US data

Philadelphia Fed President Patrick Harker said that the Fed would continue to hike rates “for a while” and expected the Federal funds rate (FFR) to be “well above 4%” by the end of the year. Of late, the Federal Reserve Governor Lisa Cook said that to curb high inflation, it would require to continue to tighten monetary conditions and then keep them “for some time.”

Given that the Federal Reserve’s measures had already impacted segments of the economy, some are lagging, like the labor market. The US Department of Labor reported that unemployment claims for the last week rose by just 214K less than the 228K foreseen by analysts. At the same time, the Philadelphia Fed reported business conditions for the area contracted by 8.7, more than estimates but less than September’s 9.9 fall.

Later, the US housing market prolonged its deterioration as September’s Existing Home Sales shrank by 1.5%, to 4.71 million houses, vs. estimates of a 2.14% contraction.

In the meantime, the US Dollar Index, a gauge of the buck’s value against a basket of peers, is trimming some earlier losses, down by just 0.05% at 112.849, a headwind for XAG/USD. US bond yields continue to rise, with the 10-year rate extending its gains by eight bps, hitting 4.215%, its highest level since 1990.

Silver Price Forecast

XAG/USD is downward biased, despite the ongoing bounce from weekly lows, around $18.20s. Even though the Relative Strength Index (RSI) is about to cross over its 7-day RSI Simple Moving Average (SMA), which would be a bullish signal, it would mean an upside correction to the ongoing trend. Therefore, XAG/USD might test the 50-day Exponential Moving Average (EMA) around $19.15 before resuming its downtrend.