Silver Price Forecast: XAG/USD rallies above $21.50 on falling US Treasury yields

Silver spot (XAG/USD) held its ground for the last two trading days and advances firmly in the North American session, almost 2% up, and is closing at around the $21.50 mark, boosted by falling US Treasury yields. At the time of writing, XAG/USD is surging sharply and is trading at $21.53.

Silver is soaring as US Treasury yields fall; Fed Chair Powell to speak on Tuesday

Meanwhile, US Treasury yields remain pressured, led by the 10-year benchmark note sitting at 2.879%, dropping four-and-half basis points, a headwind for the greenback. The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, declines sharply from around daily highs and is at 104.367, down 0.19%.

Late in the New York session, market sentiment shifted positive, despite European stocks finishing with losses. Despite investors’ growing concerns that an aggressive Federal Reserve could cause a recession, US stocks are recording gains during the day. The aforementioned, alongside China’s struggling with Covid-19 lockdowns, threatens to derail the global economic recovery.

Earlier in the New York session, the New York Fed President John Williams expressed that the number one issue for the Fed is inflation, and it is running far too high and stubbornly persistent. Williams stated that 50-bps rate hikes make sense at upcoming meetings

The US economic docket would feature additional Fed speaking led by Fed Chair Jerome Powell on Tuesday. Regarding macroeconomic data, April’s Retail Sales, Industrial Production, Building Permits, and Initial Jobless Claims would shed some light regarding the actual economic status of the United States.

Silver Price Forecast (XAG/USD): Technical outlook

XAG/USD remains downward biased, despite rallying in the last couple of days. The daily moving averages (DMAs) are still above the spot price, meaning that bears are in control unless silver bulls conquer February’s 3 pivot low at around $22.00, which would mean that the trend would shift from bearish to neutral-bearish.

However, the jump from the oversold territory of the Relative Strength Index (RSI) at 35.04 could add some support to the bounce at the YTD lows around $20.45, but unless it breaks the RSI’s trendline drawn at around the 50-midline, XAG/USD remains downward pressured.

That said, XAG/USD’s first support would be $21.00. Break below would expose the YTD low at $20.45. Once cleared, the next support would be July 17, 2020, at a daily low at $18.93.