Silver Price Forecast: XAG/USD struggles at $22.50 on rising US T-bond yields
- The market sentiment is upbeat, which triggers a move from safe-haven assets towards riskier ones.
- Rising US T-bond yields boost the greenback while weakens the non-yielding silver.
- Positive divergence and a bullish-piercing pattern on a daily chart triggered the move towards $22.60.
Silver (XAG/USD) is sliding for the first day out of four, trading at $22.62, down 0.25% during the day at the time of writing. Investors’ risk appetite is in risk-on mode, depicted by US stock indices price action, with the S&P500, the Dow Jones, and the Nasdaq posting gains of 1.48%, 1.29%, and 1.90%, respectively.
Higher US T-bond yields, weighing on silver
The US 10-year Treasury yield is rising four basis points (bps), sitting at 1.522%, weighing on the white metal price, as higher bond yields mean higher real yields, hurting the prospects of non-yielding assets, like gold and silver. In the meantime, the US Dollar Index (DXY), which tracks the buck’s performance against its peers, is up 0.13%, currently at 93.93.
XAG/USD Price Forecast: Technical outlook
In a daily chart, XAG/USD is trading below the daily moving averages (DMA’s), suggesting that silver is in a downtrend. However, the bounce off at $21.00 on a positive divergence between price action and momentum indicator like the Relative Strength Index (RSI) spurred an upside move capped around $22.60, which was previously tested unsuccessfully six times. Additionally, the presence of a bullish-piercing candle pattern exerted further upward pressure on the move.
A daily close above $22.60 could open the door for further gains. The first resistance would be $23.00. A break above the latter would expose key support supply levels. The 50-day moving average (DMA) at $23.69, followed by the September 10 high at $24.29.
On the other hand, failure at $22.60 could pave the way to a fall towards the 2021 year lows around $21.00, but it will find some hurdles on the way down. The first demand zone would be $22.00. A breach beneath that level would expose essential demand areas at $21.42, followed by $21.00.
The Relative Strength Index (RSI) is at 44, slightly down, suggesting downward pressure still on the white metal and could trigger another leg down.
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
