XAG/USD is oscillating in the $21.70-$90 range on broad US dollar weakness

  • Risk-on market sentiment was no excuse for silver gaining, helped by a weak US dollar.
  • US Treasury yields fell, with the exception of 10-year TIPS, which was a headwind for silver prices.
  • Silver Price Forecast (XAG/USD): Consolidation in the $21.50-$22.00 range.

Silver (XAG/USD) plummets for two straight days of losses, up 0.50% midway through the North American session as US traders rebound from a long weekend. At the time of writing, XAG/USD is trading at $21.70 and gaining $0.10.

Global equities are recovering showing a risk-on sentiment. Meanwhile, the greenback is little changed as shown by the US Dollar Index, which is parked around 104.412 and down 0.01%. The US 10-year Treasury yield rose three basis points to 3.298% without dragging the white metal price down.

Meanwhile, the 10-year US Treasury Inflation-Linked Securities (TIPS), a proxy for real yields, turned positive, yielding a basis point higher at 0.696%, giving precious metals prices a headwind.

On the day, XAG/USD hit an intraday high of around $21.94, but buyers lacked the strength to challenge the $22.00 figure last tested on Jun 13. As a result, silver prices fell despite staying around the $21.70 area.

Regarding the data, the US economy list contained some speeches from the Fed. Richmond Fed Chairman Thomas Barkin commented that he had opted for 75 basis points in June on the back of the University of Michigan (UoM) reports on consumer confidence and inflation expectations. Furthermore, he added that 50 or 75 basis points in July would be appropriate and commented that inflation will come down once supply chain issues are resolved.

Previously, the Chicago Fed National Activity Index for May was 0.01, its lowest in eight months, behind April’s 0.40. Most recently, US existing home sales fell 3.4% to 5.41 million in May 2022, the lowest since June 2020.

Next week, traders should brace themselves for Fed Chair Jerome Powell’s appearance before the US Senate Banking Committee, where he will be questioned about the US economy.

Silver Price Prediction (XAG/USD): Technical Outlook

XAG/USD is showing the undeclining metal consolidating within the $21.50-$22.00 range, despite forming a bullish flag. However, if the XAG buyers fail to make a daily close above $22.00, silver bias will continue to trend lower. Additionally, a two-month-old downtrend line is near $22.00, which means any test could find some sellers lying around.

However, initial resistance on XAG/USD would be the June 16 high at $21.96. A break above it would expose the $22.00 level, followed by the aforementioned trendline near $22.10. On the upside, initial XAG/USD support would come in at $21.50. A break of the latter would reveal the May 19 swing low at $21.28, followed by a test of $21.00.

Important technical levels

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