Silver Price Analysis: XAG/USD erases daily gains as USD recovers

• The XAG/USD pair is trading sideways, around $22.90, after reaching a high around $23.15.
• US manufacturing and services PMIs were in line with expectations, while European figures disappointed.
• The rise in US Treasury yields favored downward movements. The hawkish bets on the Fed remain low.

In Tuesday’s session, XAG/USD struggled to gain momentum as the Dollar traded strongly against its rivals following the release of strong S&P Global PMIs. In reaction, US Treasury yields rose slightly, but hawkish bets on the Federal Reserve (Fed) remain low, which could limit the gray metal’s losses. New high-level figures will be released in the US this week, and Chairman Powell will speak on Wednesday.

The US S&P Global October Manufacturing PMI came in at 50, beating the forecast of 49.5 and rising from its previous figure of 49.8. The services index also met expectations and stood at 50.9, beating the consensus of 49.8 and rising into expansion territory from its last reading of 50.1. Both indices suggest a strong and optimistic outlook for the US economy.

In reaction, the Dollar, as measured by the DXY index, rose from a low of 105.35 to 106.20, driven by rising US yields. However, hawkish bets on the Federal Reserve (Fed) remain thin, which could limit the dollar’s upside potential. Other catalysts include key data due this week, such as Friday’s Personal Consumption Expenditure numbers, which are expected to have slowed in September, and with the Core Consumer Price, the Fed’s preferred inflation gauge, which It is expected to be 3.7% year-on-year from 3.9% previously. Furthermore, the Gross Domestic Product (GDP) is expected to have increased significantly in the third quarter, with an annualized growth rate of 4.2%.

XAG/USD Levels to watch

Looking at the daily chart, the outlook is neutral to bullish in the short term as the metal could continue to consolidate recent moves using the convergence of the 100- and 200-day SMA as resistances around $23.30. Meanwhile, the Relative Strength Index (RSI) is showing a flat slope above its midline, while the Moving Average Convergence (MACD) is plotting lower green bars.

As long as the bulls fail to conquer the $23.30 zone, the overall outlook will favor the bears.

Support levels: $22.65, $22.50, $22.30.

Resistance levels: $23.30, $23.50, $23.70.

XAG/USD Daily Chart