Silver Price Forecast: XAG/USD trims Monday losses, eyes the 200-day EMA around $21.30

Silver price is recovering some ground against the US Dollar (USD), rising some 1.50% on Tuesday, as sentiment continues to deteriorate, with US equities tumbling while US Treasury yields advanced. Nevertheless, the XAG/USD erased some of its Monday losses, trading at $21.27, above its opening price, after hitting a daily low of $20.92.

Investors’ mood shifted sour, weighed by a big US tech company slide. Data revealed by the US Conference Board (CB) showed that consumer confidence dropped to a four-month low of 100.2. “The combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023,” said Lynn Franco, senior director of economic indicators at the Conference Board.

Elsewhere, Federal Reserve officials remained hawkish, led by the St. Louis Fed President James Bullard saying that the US central bank has “ways to go to a restrictive policy.” The New York Fed President John Williams echoed some of his comments, adding that the strong economy in the US “suggests a modestly higher path for policy relative to September. Not a massive change, but somewhat higher.” Meanwhile, money market futures have priced in a 50 bps hike in December, with odds of a 75 jumbo increase at 15%.

In the meantime, the Covid-19 riots in China appeared to wane as health officials urged local governments to avoid unnecessary and lengthy lockdowns. Chinese health officials said the Omicron variant is less severe while committed to vaccinating elder people aged 80 or older.

Aside from this, the US 10-year Treasury bond yield continued to climb five bps, at 3.735%, capping XAG/USD gains. Of note, Silver rested the 200-day Exponential Moving Average (EMA) at $21.32, though failure to break it could pave the way for a re-test of the $20.00 psychological level.

Meanwhile, the US Dollar Index (DXY), a measure that tracks the greenback’s value against a basket of peers, is gaining 0.05% up at 106.705, putting a lid on XAG/USD prices.

The US docket would be busy with the release of ADP figures, GDP, the Goods Trade Balance, Wholesales Inventories, the Chicago PMI, JOLTs report, Pending Home Sales, and Fed speaking, led by the Federal Reserve Chairman Jerome Powell.

Silver Price Analysis (XAG/USD): Technical outlook

Even though Silver reclaimed $21.00, the white metal broke below a one-month-old upslope trendline drawn since the beginning of November, which, intersects with the 200-day EMA around $21.32, a difficult resistance to surpass. The Relative Strength Index (RSI) at bullish territory suggests buyers are in charge, though lacking the strength to break the latter. Tuesday’s candle, with a long upper wick, portrays sellers stepping in; therefore, the XAG/USD might consolidate.

XAG/USD key resistance levels lie at the 200-day EMA at $21.30, followed by November’s 24 high of $21.67, ahead of $22.00. On the flip side, XAG/USD first support would be $21.00, which, once cleared, could send the white metal sliding to the 50-day EMA at $20.00.