Silver Price Forecast: XAG/USD rallies above $22.00 on falling US bond yields, ahead of US NFP

Silver (XAG/USD) is surging to fresh weekly highs above $22.00 amidst an upbeat market sentiment that weighed on the safe-haven US Dollar, also undermined by US Treasury yields, particularly the 10-year benchmark note rate, almost flat at 2.911%. At the time of writing, XAG/USD is trading at 22.38.

The market mood improved, as shown by US equities registering gains, while Asian stocks are set for a higher open. Investors set aside concerns about a possible US recession, spurred by the US Federal Reserve’s aggressive tightening path, while also assessing ongoing China’s coronavirus crisis, which has eased some restrictions, as it battles to fulfill the 5% growth target by the end of 2022.

Additionally to the abovementioned, the conflict between Ukraine-Russia, which has lasted for three months, has begun to weigh on food and commodity prices.

Elsewhere, the Fed speakers parade continued. Cleveland’s Fed President Loretta Mester said that she supports 50 bps increases in the next couple of meetings and added that the Fed is well-positioned to consider the appropriate pace for further rate hikes.

Mester added that she is unsure how high rates need to go, and a pause on the tightening cycle would depend on data. Nevertheless, she emphasized that the Fed would slam the brakes if inflation remains stubbornly high, and she still keeps 25 or 50 bps rate hikes, contrarily to a pause in September.

Earlier on Thursday, the Fed’s Vice-Chair Lael Brainard said that the central bank is getting mixed signals on the economy and that the number one challenge is bringing inflation down. When asked about a Fed pause, she said it is harder to say because the policy is not on a pre-set course via CNBC.

In the meantime, the US calendar would release the May Nonfarm Payrolls report, ISM Non-Manufacturing, and Composite PMIs, alongside additional Fed speakers, ahead of the blackout of the June Federal Reserve Open Market Committee meeting.

Silver Price Forecast (XAG/USD): Technical outlook

XAG/USD surged sharply and broke on its way up the $22.00 mark. Additionally, the Relative Strength Index (RSI) entered positive territory due to the size of the move, meaning that the rally has some legs to go before turning south. Also, it’s worth noting that the XAG/USD’s first resistance level is the confluence of the 50-DMA and the May 5 high, up at $23.26-28, respectively. A breach of the latter could pave the way for further gains. XAG/USD’s next supply zone would be the 200-DMA at $23.51, followed by the 100-DMA above all the DMAs at $23.72.

Key Technical Levels