Silver Price Prediction – Silver prices sustained their rally on a weaker dollar and declining yields 

Key Insights

• Silver prices rose on softer economic data.  
• Treasury yields fall amid the continuation of last week’s stock sell-off.
• Oil prices moved slightly higher on tight global supply. 

Silver prices traded higher as inflationary fears linger among investors. Gold prices extended gains on Tuesday as the US dollar dipped to a one-month low. The dollar has continued to soften from multi-year highs.

Aggressive Fed tightening has already been priced into the market. Benchmark yields tumbled today as the stock sell-off from last week resumed. The ten-year yield plummeted by 12 basis points today and traded above a level not seen since late 2018. Oil prices rose on concerns over tight supply.

The European Union is clenching a contract on banning Russian oil imports. An embargo will likely offset strengthening demand due to the easing of restrictions in China and increased US oil output.

The US Flash Manufacturing PMI for May came in at 57.5, while the Dow Jones estimate was at 57.4. However, the US Flash Services PMI came in at 53.5, 1.5 lower than the forecast of 55.

These key economic data points signal that mounting inflation has weighed on supply, and declining demand for goods and services. Fed Chair Powell is due to speak today and will likely state the Fed’s aim to raise rates to rein in inflation despite the clear weakness in the economy.

Technical Analysis

Silver prices remain elevated, holding steady over the $22 level, maintaining a bullish outlook. XAG/USD sustains upward momentum over the 200-day moving average. A weakening dollar and disappointing economic data underpin the positive momentum for the precious metal. 

Support is seen near the 10-day moving average of $21.56. Resistance is seen near the 200-day moving average of 23.58. Short-term momentum is positive as the fast stochastic had a crossover buy signal.

The medium-term momentum turns positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in positive territory, which reflects an upward trend in price movement.