Silver Price Forecast: XAG/USD dips as US bond yields rise, US NFP data exceed forecasts


  • Silver price pulls back as robust US jobs report strengthens Treasury bond yields.
  • Expectations for a July rate hike by the Fed mount, pressuring precious metals.
  • Resolution of US debt-ceiling drama provides potential respite for Silver.

Silver price makes a U-turn following the path of Gold, as precious metals weighed by high US Treasury bond yields edge lower. XAG/USD opened around the daily highs and printed a weekly high of $24.00 before retreating past the 50- and 20-day Exponential Moving Averages (EMAs) confluence at the time of writing. XAG/USD is trading at $23.61, down 0.01%.

XAG/USD retreats amid strong US jobs data and anticipation of Fed rate hike

XAG/USD slid on a hotter-than-expected US Nonfarm Payrolls report in May, which revealed that 339K Americans entered the workforce, more than one and a half expected of 190K. The headline data suggests the Federal Reserve (Fed) still has some work. Still, the Unemployment Rate saw signs of upward pressure, from 3.4% to 3.7% YoY, while Average Hourly Earnings, seen as wages inflation, stood at 4.3% YoY, a tick lower than April’s.

Given the amount of data revealed, traders brace for a July rate hike by the Fed, aligning themselves with recent Fed officials’ commentary, led by the Chair Jerome Powell, saying the US central bank could skip a meeting to see the effects of 500 bps of tightening. Vice-Chair nominee Philip Jefferson and the Philadelphia Fed President Patrick Harker reinforced the message.

Therefore US Treasury bond yields exploded to the upside, a headwind for the precious metals segment. US Treasury bond yields climbed, with 2s up 16 bps to 4.501%, while 10s stand at 3.689%, gaining nine bps. The US Dollar Index (DXY), which tracks the greenback’s value against a basket of six currencies, rose 0.46%, up at 104.041, but set to finish the week on the wrong foot.

On the geopolitical sphere, the US debt-ceiling saga finished with a happy ending, with both chambers, the US House and the Senate passing the bill, easing fears of a possible US government default. The bill would be signed into law by US President Joe Biden over the weekend.

XAG/USD Price Analysis: Technical outlook

XAG/USD Daily chart

Given the fundamental backdrop, the XAG/USD shifted from neutral upward biased to neutral. The Relative Strength Index (RSI) indicator dodged the 50-midline and aimed downwards, suggesting that sellers are still in place. But the 3-day Rate of Change (RoC) indicates that selling pressure is beginning to fade. It means the white metal could remain sideways, awaiting the next catalyst.

Upwards, resistance levels lie at the 20-day EMA at $23.79, the 50-day EMA at $23.91, and the $24.00 figure. Conversely, XAG/USD support levels are the 100-day EMA at $23.47, the $23.00 psychological price level, and the 200-day EMA At $22.85.

XAG/USD

Overview
Today last price 23.61
Today Daily Change -0.27
Today Daily Change % -1.13
Today daily open 23.88
 
Trends
Daily SMA20 23.97
Daily SMA50 24.44
Daily SMA100 23.36
Daily SMA200 22.1
 
Levels
Previous Daily High 23.92
Previous Daily Low 23.28
Previous Weekly High 23.92
Previous Weekly Low 22.68
Previous Monthly High 26.14
Previous Monthly Low 22.68
Daily Fibonacci 38.2% 23.68
Daily Fibonacci 61.8% 23.53
Daily Pivot Point S1 23.47
Daily Pivot Point S2 23.05
Daily Pivot Point S3 22.82
Daily Pivot Point R1 24.11
Daily Pivot Point R2 24.34
Daily Pivot Point R3 24.75

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD defends 0.6400 after Chinese data dump

AUD/USD defends 0.6400 after Chinese data dump

AUD/USD has found fresh buyers near 0.6400, hanging near YTD lows after strong China's Q1 GDP data. However, the further upside appears elusive amid weak Chinese activity data and sustained US Dollar demand. Focus shifts to US data, Fedspeak. 

AUD/USD News

USD/JPY stands tall near multi-decade high near 154.50

USD/JPY stands tall near multi-decade high near 154.50

USD/JPY keeps its range near multi-decade highs of 154.45 in the Asian session on Tuesday. The hawkish Fed expectations overshadow the BoJ's uncertain rate outlook and underpin the US Dollar at the Japanese Yen's expense. The pair stands resilient to the Japanese verbal intervention. 

USD/JPY News

Gold price holds steady below $2,400 mark, bullish potential seems intact

Gold price holds steady below $2,400 mark, bullish potential seems intact

Gold price oscillates in a narrow band on Tuesday and remains close to the all-time peak. The worsening Middle East crisis weighs on investors’ sentiment and benefits the metal. Reduced Fed rate cut bets lift the USD to a fresh YTD top and cap gains for the XAU/USD.

Gold News

SOL primed for a breakout as it completes a rounding bottom pattern

SOL primed for a breakout as it completes a rounding bottom pattern

Solana price has conformed to the broader market crash, following in the steps of Bitcoin price that remains in the red below the $65,000 threshold. For SOL, however, the sensational altcoin could have a big move in store.

Read more

Israel-Iran military conflict views and takeaways

Israel-Iran military conflict views and takeaways

Iran's retaliatory strike on Israel is an escalation of Middle East tensions, but not necessarily a pre-cursor to broader regional conflict. Events over the past few weeks in the Middle East, more specifically this past weekend, reinforce that the global geopolitical landscape remains tense.

Read more

Forex MAJORS

Cryptocurrencies

Signatures