Silver Price Forecast: XAG/USD tumbles on higher US bond yields but clings to the $25.00 mark

Silver (XAG/USD) plunges 3.17% during Monday's American session, despite a risk-off market mood, which usually would boost appetite for precious metals and commodities amid uncertainty around the Russia-Ukraine conflict. At press time, XAG/USD is trading at $25.05.

Russia-Ukraine discussions progressed

On the Russia-Ukraine front, officials from both countries expressed that talks indeed have progressed, suggesting there could be positive results within days. Moreover, the US Deputy Secretary of State Sherman confirmed that Russia showed signs of willingness to engage in substantive negotiations.

The market reacted positively, sending European indices higher, which in fact, closed in the green. Contrarily, in the US, indexes record losses due to a sudden shift in sentiment, linked to rumors of China’s willingness to provide military assistance to Russia, according to officials familiar with American diplomatic cables on the exchange.

US Treasury yields “finally” underpin the greenback

Despite the above-mentioned, hostilities persist, which could spur another leg-up in the non-yielding metal. Meanwhile, the US Treasury yields rallied at the beginning of the FOMC week, with the 10-year T-note yield rising 13 and a half basis points, sitting at 2.142%, a headwind for precious metals, with silver and gold down 3.17% and near 2%, respectively.

The US Dollar Index, a gauge of the greenback’s value vs. six peers, pare its earlier losses and reclaimed the 99.00 mark.

The US economic docket was empty, but on Tuesday will feature the Producer Price Index (PPI), the New York Empire State Manufacturing Index, and on Wednesday, Retail Sales and the Federal Reserve monetary policy decision.

XAG/USD Price Forecast: Technical outlook

Silver is still upward biased, despite the ongoing correction, which stalled at the 61.8% Fibonacci golden ratio, at $25.03, though downside risks remain. In the case of a deeper correction, the following support for XAG/USD would be the 78.6% Fibonacci at $24.50, which is $0.50 up of the 200-day moving average (DMA), an area in which XAG/USD bulls lean before launching another test towards $27.00.

Upwards, the first resistance would be the 50% Fibonacci retracement at $25.39, once cleared, would open the door towards the 38.2% at $25.76, and then the $26.00 mark.