Silver Prices Remain Largely Unchanged amid EU plans to implement new sanctions on Russia

Key Insights

• Silver prices held steady as yields climbed 
• The dollar declined against commodity-linked currencies like the Loonie 
• Benchmark yields rise as Fed Gov. Brainard signals aggressive Fed policy
• Oil prices continue to climb as European countries consider new sanctions

Silver prices remained little changed as lingering geopolitical uncertainty counters hawkish Fed policy. The ten-year treasury yield rose to 2.56%, its highest since May 2019. The rise comes following Fed Gov. Brainard’s statement that the Fed needs to implement a more aggressive policy to drive down inflation. The dollar fell as commodity-linked currencies as the Loonie rose due to rising oil prices and robust macro data. New sanctions on Russia still act as a tailwind for both silver and gold prices. The new sanctions proposed by the EU include a ban on the purchase of Russian coal, oil imports, and Russian ships entering the EU. Oil prices continued to rise on the prospect of new Russian sanctions. Investors await minutes from the latest FMOC meeting, which will be released on Wednesday.

The US reported the February trade balance. The actual balance was -$89.2 billion compared to the expected -88.5 billion. The reading remained little changed from the previous month, a record shortfall. Exports increased by 1.8%, and imports rose 1.3%. The Russia-Ukraine conflict could reduce demand for US exports in the coming months.

Technical Analysis

Silver prices rose to nearly $25.00 before retreating to the $24.36 level, trading flat as the Fed might implement a more aggressive policy. However, new sanctions on Russia could act as a tailwind due to silver’s safe-haven qualities, resulting in some intraday gains. Hawkish Fed policy will strengthen the dollar, which will increase the opportunity cost of holding non-yielding, safe-haven assets. Silver faces downward pressure. This situation can cause XAG/USD to break below support. Support is seen near the 200-day moving average near 23.9. Resistance is near the 10-day moving average near 24.9. Short-term momentum turned negative as the fast stochastic had a crossover sell signal.

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