XAGUSD falls as weak US data boosts high US bond yields



  • The price of silver starts the week heavy, sliding towards $18.40 ahead of the FOMC meeting.
  • Weaker than expected data signaling further deterioration in the US economy is supporting US Treasury yields.
  • Silver Price Prediction (XAGUSD): Bias to the downside, to stay at the $18.00 mark in the near term.

The price of silver is moving back from daily highs near the $18.70 region towards the $18.40 area. Mixed market sentiment, boosted by the upcoming meeting of the Federal Reserve’s Open Market Committee, as well as preliminary results for US corporate earnings and US GDP, which are expected to rise but on the verge of confirming a technical recession in the United States, keep silver prices high.

XAGUSD started the week trading around $18.60, climbed steadily near the R1 daily pivot at $18.84, but dipped below the S1 daily pivot and hit the daily low at $18.30, but recovered ground, snaking around the S1 pivot point at $18.40.

Despite weaker US data, safe-haven flows head towards the greenback

Late news agencies confirmed that Gazprom had cut natural gas flows by 20% in the Nord Stream 1 pipeline, triggering a jump in the US dollar index to 106.420. In the meantime, US economic data shows further deterioration in the economy, with the Dallas Fed’s US manufacturing index collapsing to -22.6 from -12.5 in July. That, along with the Chicago Fed’s national activity tumbling to -0.19 in June, keeps recession fears in investors’ minds. With the US Federal Reserve set to rise 75 basis points on Wednesday, the white metal is expected to accelerate its losses as rising US Treasury yields boost appetite for the greenback.

As for money market futures, expectations of a 75 basis point interest rate hike by the Fed stand at a 75% chance, while estimates of a 100 basis points are at 25%.

Turning to US Treasury yields, the benchmark 10-year note’s coupon rose two and a half basis points, yielding 2.807%, while the US 2s-10s yield curve remains inverted for the sixteenth day. consecutively, at -0.207%.

What to watch

On Tuesday, the US economic record will feature CB consumer confidence, new home sales and the start of the two-day US FOMC monetary policy meeting.

Silver Price Prediction (XAGUSD): Technical Outlook

The price of silver is showing signs that the downtrend that has accelerated since mid-April is running out of steam, unable to breach the $18.00 barrier, which once breached would open the door for further losses , towards June lows around $16.95. Traders in XAGUSD should notice that the Relative Strength Index (RSI) has broken off oversold levels but is aiming lower, poised to break below the RSI’s 7-day SMA, opening the door for further action at the lower end. decrease.

Therefore, the first support for XAGUSD would be the lowest since the start of the year at $18.14. The XAGUSD break below will expose $18.00, followed by a challenge of $17.00, before refreshing 2-year lows around the June 2020 lows at $16.95.

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