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Silver Price Forecast: XAG/USD struggles to post gains amid hawkish Fed, rising US yields

  • Silver price was unable to break the 200-day moving average of $23.46 after the Fed’s hawkish stance.
  • Fed’s upward revision of interest rates and strong economic projections lift US Treasury yields, adding pressure on precious metals.
  • US real yields break the 2% barrier, signaling potential headwinds for silver; investors should closely monitor yield movements.

Silver price clings to its earlier gains, though it failed to sustain a break above the 200-day moving average (DMA) of $23.46 after the US Federal Reserve delivered a hawkish pause. Consequently, the Greenback (USD) advanced, underpinned by the US Treasury bond yields advancement to multi-year highs. The XAG/USD is trading at $23.24, a gain of 0.24%.

XAG/USD fails to break 200-DMA, trades at $23.24 as Fed’s hawkish pause boosts the Greenback

XAG/USD extended its losses after the Fed held rates unchanged at the 5.25%-5.50% range. Officials stressed that “Inflation remains elevated” while acknowledging the economy is expanding “at a solid pace” while the labor market remains tight. Nevertheless, market participants reacted to the Summary of Economic Projections  (SEP), which showed upward revisions to the Federal Funds Rate (FFR).

The SEP showed Fed policymakers eyeing rates to finish at 5.6% in 2023 and 5.1% in 2024, above June’s 4.6% projection. In regards to additional economic data, the Gross Domestic Product (GDP)) was also upward resided from 1% to 2.1%. The unemployment rate is expected to dip to 3.8% from 4.1%, PCE stood at 3.3%, up from 3.2%, while core PCE is foreseen to fall from 3.9% to 3.7%.

In his press conference, the Fed Chair Jerome Powell said the US central bank is “prepared to raise rates further, if appropriate.” He added the Fed’s intention to keep policy at a restrictive level until they’re confident that inflation is moving towards the Fed’s2% objective.

Consequently, US treasury bold yields climbed, with US 2s and 5s reaching 5.152% and 4.547% each. That underpinned the Greenback, as shown in the US Dollar Index (DXY), a gauge of the buck’s performance against its peers, closing at 10.33 for 0.12% gains.

In the meantime, US real yields pushed higher, as seen by the US 10-year Treasury Inflation-Protected Securities (TIPS) bond yield, which broke the 2% barrier and finished at 2.046%, a headwind for precious metals.

Hence, if US real yields continue to climb, investors could expect further downside in the segment. Therefore, XAG/USD traders must track them to gauge the future direction of Silver prices.

XAG/USD Price Analysis: Technical outlook

After failing to achieve a daily close above the 200-DMA successfully, the XAG/USD is exposed to sellers, as drafted by the daily chart. On Wednesday’s session, the white metal printed a daily high at $23.58, shy of the 50-DMA at $23.70, opening the door for a pullback, which occurred using the Fed’s decision as a catalyst. Therefore, the XAG/USD most likely scenario would push prices below the $23.00 mark, followed by the September 14 daily low of $22.30. On the other hand, upside risks remain at the September 20 daily high of $23.58.

XAG/USD

Overview
Today last price23.2
Today Daily Change0.00
Today Daily Change %0.00
Today daily open23.2
 
Trends
Daily SMA2023.63
Daily SMA5023.74
Daily SMA10023.7
Daily SMA20023.48
 
Levels
Previous Daily High23.42
Previous Daily Low23.1
Previous Weekly High23.29
Previous Weekly Low22.3
Previous Monthly High25.02
Previous Monthly Low22.23
Daily Fibonacci 38.2%23.22
Daily Fibonacci 61.8%23.3
Daily Pivot Point S123.06
Daily Pivot Point S222.92
Daily Pivot Point S322.73
Daily Pivot Point R123.38
Daily Pivot Point R223.56
Daily Pivot Point R323.71

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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