Silver Price Forecast: XAG/USD plummets almost 2%, amid a risk-off market mood

Silver (XAG/USD) extends its overnight session losses, plunges 1.91% in the day, trading at $23.14 during the New York session at the time of writing. The discovery of a new COVID-19 variant called NU in South Africa dented the market sentiment.

South Africa discovered a new COVID-19 variant, which dampened market sentiment

According to wires, the global scientific community is on alert. There is a chance that the new COVID-19 variant “NU” discovered in South Africa, could be more virulent than the Delta and vaccine-resistant. Scientists said that it has many mutations on the spike protein, and it is the “most evolved” variant yet discovered from the original virus.

In the overnight session, XAG/USD reached a daily high at $23.70. However, once the level was reached, COVD-19 news crossing the wires triggered a $0.40 drop that found some follow-through as the European and North American sessions progressed. In the last couple of hours, silver broke below $23.00 but bounced off Friday’s low at $22.87, reclaiming the $23.00 as of writing.

In the meantime, the US Dollar Index, which tracks the greenback’s performance against a basket of six rivals, falls 0.60%, sits at 96.15, underpinned by falling US T-bond yields, with the 10-year benchmark note, slides 14 basis points, down to 1.50%.

Therefore, COVID-19 developments would be the main drivers for silver and commodity traders. It is worth noticing that gold is trading with heavy losses, collapsed $15.00 in the day, standing at $1,785, at press time. Further, Western Texas Intermediate (WTI), US crude oil benchmark is down 11.63%, trading at $68.91.

XAG/USD Price Forecast: Technical outlook

Silver (XAG/USD) has a bearish bias, as depicted by the daily moving averages (DMA’s) residing above the spot price. That, alongside the Relative Strenght Index (RSI) at 36, indicates that the non-yielding metal still has enough room to print another leg-down.

In the outcome of extending the downtrend, the first demand zone would be the $23.00 figure. A breach of the latter would expose crucial support levels, like the October 12 swing low at $22.34, followed by the psychological $22.00.