XAG/USD surges to fresh 3-week highs but retreated to $19.60

  • Silver prices are up more than 2.50% on a flat US dollar and flat US Treasury yields.
  • A risk off impulse acted as a tailwind for XAG, although good US economic data supported the USD.
  • XAG/USD traders are gearing up for the November Federal Reserve meeting, watching Jerome Powell’s press conference and looking for a Fed pivot.

Silver prices are losing for two days, climbing above the 20- and 100-day Exponential Moving Averages (EMAs) amid a flat US dollar, while falling US Treasury yields, particularly the 10-year rate, at 4.046% remain almost unchanged. Hence, XAG/USD is trading at $19.60, up 2.63%.

XAG/USD is steadily climbing and holding gains despite good US data

Wall Street pared some of its earlier losses but ended lower. US economic data reinforced the need for further Fed tightening as manufacturing activity continues to expand on the brink of entering a recession, which could put pressure on Jerome Powell and co to slow the pace of rate hikes.

The US Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index for October came in at 50.2, better-than-expected but lower than September’s reading, while the price index showed costs slipped to more than a two-year low. Previously, the S&P Global Manufacturing PMI for the same period preceded the ISM, at 50.4, above estimates and the previous month’s read.

Meanwhile, the JOLTS report, released by the US Department of Labor, reported that job vacancies jumped 10.717 million, beating estimates of 10 million and beating August’s 10.28 million.

As soon as the reports crossed the news channels, the white metal fell back from its three-week high of $20.02 to just above the 100-day EMA at $19.50, which was a difficult support to clear.

However, XAG/USD traders are gearing up for the Federal Open Market Committee (FOMC) meeting. Most analysts on the street expect a 75 basis point rate hike, but they would be eyeing every word from the Fed Chairman Jerome Powell to assess if there is a Fed pivot or the December meeting would be ‘live’ meaning there would be no forward guidance.

Before the Fed’s decision the US calendar will unveil the ADP Employment Change Report.

XAG/USD Price Analysis: Technical Outlook

From a daily chart perspective, XAG/USD is neutral down bias unless silver buyers retrace October high of $21.23. A break above the latter will uncover key resistance levels such as the 200-day EMA at $21.54 which, once cleared, could take XAG/USD to a June high of $21.92. On the other hand, XAG/USD initial support would be the 100-day EMA at $19.50, followed by the 20-day EMA at $19.28, ahead of the 50-day EMA at $19.10.

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