Silver Price Forecast: XAG/USD stays above $24 despite retreating from weekly highs
- Silver price dips but staus nearby YTD highs as the US Dollar weakens.
- XAG/USD is underpinned as US Treasury bond yields collapse with investors pricing a less aggressive Fed.
- St Louis Fed President Bullard forecasts rates above 5%, says OPEC’s oil production cut will make Fed’s work “difficult.”
Silver price is trading below its opening price by around 0.37%, though it stays above the $24.00 threshold. Falling US Treasury bond yields and a soft US Dollar (USD) are two reasons for XAG/USD’s rise. At the time of writing, the XAG/USD exchanges hands at $24.01.
The sentiment is deteriorating. US equities fluctuated after the S&P and the ISM Manufacturing PMIs, showing that business activity in the US is contracting. Recessionary fears are rising, and tighter lending conditions are weighing on businesses.
Therefore, safe-haven flows towards the precious metal segment, maintaining Silver prices nearby yearly highs. US Treasury bond yields are collapsing as investors have begun to price in a less aggressive US Federal Reserve (Fed), even though an official estimates rates above 5%.
The St Louis Fed President James Bullard said that the Fed needs to raise rates above 5% and emphasized that his forecast is above the median. Bullard commented that OPEC’s cutting oil output would make the Fed’s work “difficult.”
The US Dollar Index, a measure of the buck’s performance vs. six peers, tumbles 0.41%, at 102.168.
Another reason that keeps the commodity prices higher is the Organization of Petroleum Exporting Countries and its allies’ (OPEC+) decision to reduce oil production by 1 million barrels, which led to a boost in oil prices.
XAG/USD Technical analysis
Silver’s uptrend remains intact, though testing a four-month-old resistance trendline that passes around $24.20-30. Although it opened the door for a pullback, oscillators suggest the bias remains bullish. The Relative Strength Index (RSI) is exiting overbought conditions, giving buyers a respite. At the same time, the Rate of Change (RoC), portrays that buyers remain in control but take a pause.
IF the XAG/USD breaks $24.20, it will exacerbate a test of the YTD high at $24.63, followed by the $25.00 figure. On the other hand, a daily close below $24.00 could open the door for a pullback toward the March 24 high of $23.52.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
