Silver Price Forecast: XAG/USD plunges to $23.30s as US bond yields keep rallying

Silver (XAG/USD) plummets during the New York session, down 2.98%, trading at $23.44 at the time of writing. In the overnight session, the white metal could not break resistance above the $24.30s, plunging afterward, firstly towards $24.00, falling further as the European session began, reaching a daily low of $23.34.

It seems that market participants were waiting on Federal Reserve Chairman Jerome Powell’s renomination. US Treasury yields climb, with the US 10-year T-bond yield, advancing two basis points, up to 1.646%, the greenback with the US Dollar Index sits at 96.51, flat at press time after reaching a new year-to-date high around 96.61, and US equities fall, except for the Dow Jones Industrial rising 0.16%.

Now that the market is confident that the US central bank would have continuity in its monetary policy, the US Dollar extended its rally on Tuesday. According to sources cited by Bloomberg, “the market has unwound hedges against a more ‘dovish’ personnel shift.”

Meanwhile, money markets futures, with the 3-Month Eurodollar futures (a proxy for where markets expect the Federal funds rate to be in December), has dropped 10 points in his week, sits at 98.95, the lowest level in the year. The market has priced in 80 basis points of tightening over the next year, expecting at least three 25 basis points rates.

On the macroeconomic front, the US economic docket featured the IHS Markit PMI’s for November. The Manufacturing PMI came at 59.1, a tick higher than the 59, while the Services and the Composite rose to 57 and 56.5, respectively, lower than the foreseen. Further, the Richmond Fed Manufacturing Index for November increased to 11, better than the five expected.

XAG/USD Price Forecast: Technical outlook

Silver (XAG/USD) has a downward bias, depicted by the daily moving averages (DMA’s) above the spot price. Also, the Relative Strength Index (RSI), a momentum indicator, is below the 50-midline aiming lower at 40,  accelerating its fall, so XAG/USD may put another leg-down towards the November 3 low at $23.02.

On the flip side, if silver bulls keep the price above the 50-DMA at $23.53, the non-yielding metal could stabilize within the $23.50-$24.00 range.