XAG/USD steady around $18.00 amid sour sentiment

  • Silver prices start the week up 0.30% on the right foot.
  • Europe’s energy crisis worsens as G7 ministers slash Russian oil prices while Russia halts gas exports.
  • US real yields remain above the 0.70% threshold but nearly 10 basis points below daily highs.

Silver prices regained some composure on Monday, rising more than 0.50% despite weak liquidity conditions as US markets were closed for Labor Day. Meanwhile, the common bloc’s energy crisis worsens as Gazprom halted gas supplies to Europe in retaliation after a G7 meeting imposed a cap on Russian oil. At the time of writing, XAG/USD is trading at $18.08, above its open price.

Global equities are trading lower reflecting the market deterioration. Last week’s US jobs data, with better-than-expected nonfarm payrolls, downgrades and a 3.7% rise in the unemployment rate reduced the likelihood of an aggressive Federal Reserve.

The US Dollar Index renewed its 20-year high around $110.27, taking the EUR/USD pair below the 0.9900 level, despite the white metal trading lower but above its opening price. US 10-year TIPS, a proxy for real yields that measures 10-year nominal yield less inflation expectations, remain positive but are down 0.827% from daily highs at 0.729%, a tailwind for XAG/USD.

Something to see

The US list will include Fed spokesmen with Cleveland President Loretta Mester on Wednesday and Jerome Powell’s speech on Thursday. Also, jobless claims for the week ended September 2 would be watched alongside the S&P Global and ISM Services PMI by investors looking for clues as to how the US economy is faring.

Silver Price Prediction (XAG/USD): Technical Outlook

XAG/USD remains neutral to downside despite recent bounce off YTD lows at $17.56. Still, a break above the July 14th low at $18.14 is needed to open the door for a retest of the 20-50 DMA confluence around $19.25-40. Otherwise, expect a resumption to the downside and another attempt to break below the YTD low en route to the June 2020 lows of $16.95.

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