- Silver got a decent boost Monday on geopolitical/Chinese lockdown concerns, shedding headwinds from higher yields.
- XAG/USD has recovered to near $25.20, up over 40 cents and is targeting late March highs of $25.85.
- Fed speech and US inflation will be the focus this week and could test optimistic conviction.
Risk-free trading in global equities as markets worried about recent news of the Russo-Ukrainian war and the risk of further escalating lockdowns in China has offset the negative impact of a continued sharp rise in global yields in precious metals markets. Although 10-year US Treasury yields have risen another 3-4 basis points to a new multi-year high of over 2.75%, increasing the opportunity cost of holding non-profitable assets (like precious metals), spot silver (XAG/ USD) is trading with impressive daily gains of more than 1.7%.
XAG/USD is up more than 40 cents from opening levels near $24.75 to current levels around $25.20, breaking north of its 21-day moving average at $24.92. Technical buying on the break above a downtrend that has been in play since early March certainly seems to have helped. The bulls will now be eyeing a test of the late March highs near $25.85 before a possible rally to last month’s highs near $27.00.
But the silver bulls are yet to announce victory for this week amid a plethora of important risk events ahead. A flurry of Fed policymakers will speak in the coming days (with four appearing on Monday alone), likely repeating recent hawkish messages. But the main event of the week will be the release of US consumer and producer price inflation data on Tuesday and Wednesday which, if they surprise to the upside, could put even more pressure on the Fed to be hawkish.
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