Silver Price Analysis: XAG/USD cuts Monday’s losses and looks for the 200 day EMA around $21.30

• The silver price is rallying and is facing resistance at the 200 day EMA.
• The US dollar has received offers of late, courtesy of deteriorating sentiment.
• Silver Price Analysis: Break below the 1-month uptrend line.

The price of silver is regaining some ground against the US dollar (USD), rising around 1.50% on Tuesday, as sentiment continues to deteriorate, with US stocks falling while US Treasury yields rose. However, XAG/USD erased some of its losses on Monday, trading at $21.27, rising from the open after hitting a daily low of $20.92.

Investor sentiment soured, weighed down by the fall of a large US technology company. Data released by the US Conference Board (CB) showed that consumer confidence fell to a four-month low of 100.2. “The combination of inflation and interest rate hikes will continue to challenge confidence and economic growth through early 2023,” said Lynn Franco, senior director of economic indicators at the Conference Board.

Elsewhere, Federal Reserve officials remained hawkish, led by St. Louis Fed President James Bullard, who said the US central bank has “ways of getting into a tight policy.” New York Fed President John Williams echoed some of his comments, adding that the strength of the US economy “suggests a modestly higher path for policy relative to September.” Not a massive swing, but something higher.” Meanwhile, money market futures have priced in a 50 basis point rise in December, with the odds of a 75 basis point rise standing at 15%.

Meanwhile, the Covid-19 unrest in China appeared to be subsiding, as health authorities urged local governments to avoid unnecessary and prolonged lockdowns. Chinese health authorities claimed that the Omicron variant is less severe, while pledging to vaccinate the elderly aged 80 and over.

Apart from this, the 10-year US Treasury yield continued to rise by five basis points to 3.735%, capping any gains for XAG/USD. Of note, silver has broken above the 200 day EMA at $21.32, although its break could pave the way for a retest of the psychological $20 level.

Meanwhile, the Dollar Index (DXY), a measure that tracks the value of the greenback against a basket of pairs, gains 0.05% to 106.705, putting a damper on XAG/USD prices.

The US agenda would be busy with the release of ADP numbers, GDP, Goods Trade Balance, Wholesale Inventories, Chicago PMI, JOLTs, Pending Home Sales, and the Fed speaking, led by Federal Reserve Chairman Jerome Powell.

Silver Price Analysis (XAG/USD): Technical Perspective

Although silver rebounded to $21.00, the white metal broke below a month-long uptrend line drawn from early November, which intersects the 200 day EMA around $21.32. a resistance difficult to overcome. The Relative Strength Index (RSI) in bullish territory suggests that the buyers are in command, although they lack the strength to break the latter. The Tuesday candlestick, with a long upper wick, shows sellers stepping in; therefore, XAG/USD could consolidate.

XAG/USD key resistance levels lie at the 200 day EMA at $21.30, followed by the November 24 high at $21.67, before $22.00. On the other hand, the first support for the XAG/USD would be at $21.00, which, once broken, could see the white metal slide to the 50 day EMA at $20.00.