Silver Price Prediction – Silver prices recovered as yields and the dollar strengthen

Key Insights

• Silver prices traded lower as inflation data underpins aggressive rate tightening.
• Treasury yields soared after the market faced immense selling pressure this week. 
• Oil prices rose on Friday but traded lower for the week as global demand concerns outweighed lingering supply issues. 

Silver prices gained positive momentum as the sell-off in equities ended and yields rise. The dollar rallies as investors predict more aggressive Fed rate tightening. Benchmark yields moved higher as investors pulled out of bonds and rotated into stocks. The ten-year yield soared by 9 basis points today. 

Gold prices moved lower as the dollar rallied amid the prospect of more aggressive Fed rate tightening in the coming months. Oil prices rose on Friday following volatile trading this week.

However, oil prices moved lower for the week amid concerns over China’s lockdowns and rising inflation. These factors offset supply concerns from the potential embargo on Russian oil.

The economic calendar remains light today. Fed Chair Powell’s comments about the state of the economy remain in focus. Economists debate whether the Fed is considering raising rates by 75 basis points or 50 basis points at the June and July meetings. 

However, the main concern is that inflation will still be elevated even if the economy slows down. The latest CPI data made clear that rising inflation is still a lingering concern. The market is pricing in 50-basis point rate hikes for June, July, and likely for September. 

Technical Analysis

Silver prices edged higher hovering near the $21 mark after hitting a year-to-date low. However, XAG/USD faces a bearish outlook as the brief recovery will likely run its course quickly.

The trend indicates downward momentum favoring bearish traders. Gains will likely be capped at the $21.40 level. A sustained break above the $22 level could indicate a greater upside.  

Support is seen near the 2019 lows near the $19.60s region. Resistance is seen near the 10-day moving average near the 10-day moving average of 21.9. Short-term momentum is positive as the fast stochastic had a crossover buy signal.

The medium-term momentum turned negative as the histogram prints negatively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in negative territory, which reflects the downward trend in price movement.