Silver Price Analysis: XAG/USD clears part of Friday’s gains as US yields revive
- XAG/USD declined to $23.00, down by 0.80%.
- The 2,5 and 10-year yields increased by more than 1.50% during the session.
- The week’s highlight will be Chair Powell's speeches on Wednesday and Thursday.
In Monday’s session, the Silver spot price XAG/USD lost traction and declined from $23.25 to $23.00, seeing 0.80% losses on the day. Investors seem to be taking profits after last Friday’s rally, while the rising US Treasury yields also contributed to the downside.
In line with that, the 2,5 and 10-year bond rates rebounded from multi-week lows and jumped to 4.90%, 4.60% and 4.64%, respectively, all up by more than 1.50%. It's worth noticing that the US yields tend to be considered as the opportunity cost of holding the non-yielding grey metal, so as the rates recovered, the XAG/USD saw red.
Focus now shifts to Wednesday's speech by Jerome Powell as investors seek further guidance for the December meeting of the Federal Reserve (Fed). After last week’s meeting, markets are confident that the bank won’t hike again in 2023. Still, Powell’s analysis of the latest job reports data, which hinted at a cooling labor market, will shape the expectations for the next decisions.
As for now, the CME FedWatch tool indicates that the odds of a 25 bps hike in the last meeting of 2023 declined to 10%. However, those expectations will rise and fall in relation to the incoming data as Powell left the door open for further tightening in case the economic reports justify it.
XAG/USD Levels to watch
Evaluating the daily chart, signs of bullish exhaustion for XAG/USD are observed, contributing to a neutral to bearish technical stance. The Relative Strength Index (RSI) shows a downward trend above its midline, suggesting diminishing bullish strength, while the Moving Average Convergence (MACD) prints lower green bars.
Support levels: $22.90,$22.80 (20-day SMA),$22.50.
Resistance levels: $23.20 (100-day SMA), $23.30 (200-day SMA), $23.70
XAG/USD Daily Chart
