- Silver price drops on high yields as Fed policymakers push back against a dovish tilt.
- US House Speaker Pelosi’s visit to Taiwan turned sentiment sour.
- Silver Price Forecast (XAGUSD): Despite rallying $2 in the last five days, the bias is negative.
Silver price slides due to US Treasury yields rising as Fed officials pushed back markets’ expectations of a US central bank “dovish” pivot, which traders misread. At the same time, geopolitical jitters fueled flows towards safe-haven assets, which boosted the greenback. At the time of writing, XAGUSD is trading at $19.96.
Risk aversion originated from the visit of US House Speaker Nancy Pelosi, which rattled the financial markets. US equities are down, and the greenback is firm, as shown by the US Dollar Index at 106.183, up almost 0.80%. Meanwhile, US Treasury yields soared on Fed speaking, 16 basis points, yielding 2.743%, a headwind for precious metals prices.
XAGUSD drops on high yields and Fed speaking
Unleashed Fed officials have begun to cross wires led by San Francisco Fed President Mary Daly, saying that the Fed is “nowhere near” done in fighting inflation and added that “it would be premature to unwind all of that (Fed tightening) and say the job is done.”
Late in the morning, the Chicago Fed President Charles Evans said that going 50 bps “is a reasonable assessment, but 75 bps could also be okay.”
Loretta Mester, Cleveland’s Fed President, said that she has not seen inflation cool at all and is committed to bringing it under control. She added that she wants to see compelling evidence that inflation is moving down on a sustainable basis.
Data wise, US labor market data, namely JOLTs Job Openings for June, rose to 10.7 million, less than 11 million estimated by the streets. That suggests the labor market is easing amid growing economic pressures.
Silver Price Forecast (XAGUSD): Technical outlook
The XAGUSD illustrates the white metal as neutral-to-downward biased, as the $2 rally losses steam at $20.47, the 50-day EMA, further reinforced by the RSI, which turned down and aims towards the 50-midline. However, XAGUSD bears need a daily close below the $20.00 figure to extend the fall further, leaving silver exposed to selling pressure. If that scenario plays out, silver’s next support would be the 20-day EMA at $19.11. Otherwise, XAGUSD bulls could lick its wound before challenging the 50-day EMA for another time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.