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Silver Price Forecast: XAG/USD oscillates around $18.60s despite high US T-bond yields

  • Silver price steadily advances, bouncing off daily lows around $18.55.
  • The US 10-year Treasury bond yield rises above 4%, underpinning the buck.
  • XAG/USD Price Forecast: Is neutral-downwards, a fall below $18.00 would exacerbate a test of the YTD low.

Silver price climbs as the North American session progresses, trimming earlier losses as US Treasury bond yields rise, as bets that the Federal Reserve would likely hike rates for the fourth time 75 bps increased, putting a lid on the precious metals segment. At the time of writing, XAG/USD is trading at $18.66, above its opening price by 0.33%.

XAG/USD falls as the US 10-year yield rises above 4%

The market sentiment remains upbeat, with most US equities remaining in the green. US Industrial Production exceeded estimates for the third consecutive month in September, increasing 0.4% MoM vs. estimates of 0.1%, while Capacity Utilization ticked up 2 points, from 80% to 80.3%.

Even though Tuesday’s data is encouraging, on Monday, the New York Fed Empire State Manufacturing Index disappointed market participants, contracting for the third straight month, as the survey showed that responders were downbeat about future business conditions.

A reflection of that is the greenback, which dropped more than 1% on Monday, as the US Dollar Index (DXY) portrays. Nevertheless, at the time of typing, the DXY is recovering some ground, gaining 0.12%, at 112.19, underpinned by the 10-year bond yield, which is yielding 4.027%, up one bps.

Hence, XAG/USD hovers around $18.64, pairing some of its earlier losses, while US T-bond yields, namely the 10-year, hold to the 4% threshold. Worth noting that the white metal recovery happened as Fed speakers have not crossed newswires. Silver traders should be aware that Atlanta’s Fed President Raphael Bostic and Minnesota Neil Kashkari would hit wires late in the day.

XAG/USD Price Forecast

XAG/USD remains neutral-to-downward biased, as the daily moving averages (DMAs) reside above the spot price, but with the 20-DMA trapped between the 50 and 100-DMA. Of note, a cross of the 20-DMA below the 50-DMA would mean that sellers gather momentum, further confirmed by the Relative Strength Index (RSI) at bearish territory, which is almost flat. If the 20-DMA crosses below the 50-DMA, and the RSI crosses below its 7-SMA RSI, that could send XAG/USD tumbling towards $18.00, which, once cleared, could pave the way towards a YTD low of $17.56.

Author

Christian Borjon Valencia

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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