Silver Prices Forecast: XAG/USD Defies Treasury Yields Ahead of Powell’s Remarks

Highlights

• Silver prices rise for the fourth day despite surging U.S. Treasury yields.
• Treasury yields highest since Nov. 2007, yet silver remains resilient.
• Central bankers’ meeting casts a spotlight on future interest rate decisions.

Silver Gains Amid Anticipation for Central Bankers’ Meeting

Silver (XAG/USD) prices are climbing for the fourth consecutive session this Tuesday, resisting the drag from U.S. Treasury yields, which have reached their highest since November 2007. With the broader financial community focused on the imminent central bankers’ meeting for insights into future interest rate moves, the precious metal remains resilient. The diminishing U.S. Dollar, combined with technical overselling, appears to be buoying silver’s appeal, especially to international investors.

U.S. Treasury Yields and Dollar Dynamics

The backdrop to silver’s ascent is multifaceted. Benchmark 10-year U.S. Treasury yields have surged, reflecting the prevailing sentiment that U.S. interest rates will persist at elevated levels. This rise in yields traditionally deters interest in non-yielding assets like silver. However, the U.S. dollar’s recent pullback from a 10-week zenith against major currencies has offset this, offering silver a lifeline. A softer dollar typically amplifies the allure of dollar-denominated assets for foreign buyers.

Federal Reserve’s Stance: A Key Catalyst

The trading community’s eyes are set on Federal Reserve Chair Jerome Powell’s address scheduled for later this week at Jackson Hole, Wyoming. Expectations are rife that Powell might acknowledge the Federal Reserve’s success in realigning headline inflation closer to its target. Such a nod could mitigate some of the rate-induced pressure bearing down on metals like silver and gold.

Immediate Forecast: Silver’s Prospects

Given the current dynamics, any further weakening in the U.S. dollar could spark a robust rally in silver. However, the market remains cautiously optimistic, awaiting Powell’s speech for definitive cues. In the short term, the sentiment leans slightly bullish for silver, especially if the U.S. dollar continues its retreat.

Technical Analysis

Silver’s XAG/USD is exhibiting subtle bullish tendencies as it stands at 23.35, a slight increase from its previous 4-hour mark of 23.26. Positioned above the 50-4H moving average (22.74), there’s short-term bullish momentum in play. Yet, the price remains below the 200-4H moving average (23.73), suggesting a broader bearish trend. The 14-4H RSI at 69.57 indicates strong momentum, nearing the overbought threshold.

While the price is buoyed above the main support zone (22.70-22.28), it’s not far from the main resistance area (23.60-23.85). Combining these indicators, the current sentiment for XAG/USD leans bullish, but with looming resistance ahead, caution is advised.