Silver Price Forecast: XAG/USD plummets to $24.10s, on high US bond yields amid Powell renomination

Siver (XAG/USD) slides during the New York session, as US President Joe Biden renominates current Fed Chair Jerome Powell for a second term. Further, elevated Lael Brainard to Vice-Chairwoman, maintaining continuity on the Federal Reserve. At press time, the white-metal plunges almost 2%, trading at $24.17.

Silver extended its fall, from November 18 high at $25.16, as investors brace the greenback, as expectations that the Fed would hike interest rates, rather sooner than later, increase. The decision of the White House to keep Powell around for four more years increased investors’ confidence, as portrayed by US equities.

That said, the S&P 500 and the Dow Jones Industrial rallied, the US Dollar is firm, while US Treasury yields rose after two bad auctions. As mentioned by FX Street’s analyst Joel Frank, “US 10-year bond yields were last up nearly 9bps on the session to 1.62%, with yields now back to their highest levels since last Wednesday and now only about 3bps below last week’s highs at 1.65%.”

“Medium-term bond bears will want to see the 1.65% level broken, opening the door to a move back towards annual highs set back in a mark of close to 1.77%,” Frank further added. 

Read more: US 10-year yield shoots back above 1.60% while 2, 5 and 7-year yields all hit multi-month highs on Powell renomination, bad auctions

Meanwhile, the US Dollar Index, which tracks the buck’s performance against a basket of six currencies, is up almost half percent, sitting at 96.49.

XAG/USD Price Forecast: Technical outlook

The non-yielding metal daily chart depicts that silver trades between the 200 and the 100-day moving averages (DMA’s), at $24.06 and $25.30, respectively. That shows that the precious metal seems to be under selling pressure as the 200-DMA is viewed as a trendsetter lagging indicator. If the price of an asset is below the aforementioned, it means that the bias is bearish. Additionally, the Relative Strength Index (RSI), a momentum indicator that is at 49, aims lower, adding another downward signal on Silver.

The USD bulls, to accelerate the downtrend, need a daily close under the 100-DMA. In that outcome, the first demand level on the way south would be the 200-DMA at $24.05. A breach of the latter would expose the  November 3 low at $23.02.

On the flip side, if XAG/USD bulls reclaim the $25.00 figure, that could pave the way for further upside, which could propel the price towards the August 4 high at $26.00.