Silver Price Forecast: XAG/USD nosedives to fresh two-year lows below $18.00

Silver price is sliding more than 5% during the week, weighed by high US Treasury yields.
Hawkish rhetoric by Fed policymakers keeps the precious metals segment heavy.
XAG/USD Price Forecast: Break below $17.00 to push the silver price below $16.00.

Christian Borjon Valencia FXStreet

Silver price tanks sharply for four straight days, reaching a new year-to-date (YTD) low below the $18.00 figure, levels not seen since July 2020. XAG/USD is trading at $17.96 as the Asian Pacific session begins, almost flat after dropping 2.33%, hitting a two-year low of $17.91 on Wednesday.

US equities finished with losses, as month-end flows and risk aversion dominated August’s last trading day. During the day, Cleveland’s Fed President Loretta Mester expressed that rates “need to be somewhere around 4% and hold it there” on Wednesday. Mester added she does not “anticipate the Fed cutting the fed funds rate target next year.”

In the meantime, inflation in the Euro area, above the 9% threshold, puts additional pressure on the ECB. Money market futures expect at least a 50 bps rate hike on September 8.

Data-wise, the US economic calendar was light, though it featured the August ADP Employment Change, the first one, after pausing due to some changes to the survey. Private hirings rose by 132K less than July’s 270K. Later, the Chicago PMI for August increased more than estimated, topping 52.2 vs. 52 expected by analysts.

What to watch

The US economy docket will feature the S&P Global Manufacturing PMI alongside the Initial Jobless Claims for the week ending on August 26 and the ISM Manufacturing PMI.

XAG/USD Price Forecast: Technical outlook

From a technical perspective, the XAG/USD is downward biased. On Wednesday, the 20-day EMA crossed below the 50-day EMA, illustrating that sellers are gathering momentum. Worth noticing that the Relative Strength Index (RSI) has some room before entering oversold conditions. Worth noting that the RSI reached a low of 21.29 when the white metal tumbled from $26.20 in April 2022 to $20.46.

Therefore, the XAG/USD first support would be June 15, 2020, daily low of $16.95, followed by April 14, 2020, high-turned-support at $15.84.

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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