Silver Price Analysis: XAG/USD rejected by 200-day SMA as US yields recover

• The XAG/USD pair found resistance at the 200-day SMA near $23.50 and then dropped to $23.15.
• The US 10-year bond yield threatens multi-year highs.
• The two-day FOMC meeting begins.

In Tuesday’s session, the price of silver XAG/USD lost momentum and failed to conquer the 200-day simple moving average. The main reason was that US Treasury yields, often considered the opportunity cost of holding non-yielding metals, rallied as markets await Wednesday’s Federal Reserve (Fed) decision.

The 10-year bond yield reached 4.34% and is trading near the crucial 4.36% threshold, which, if broken, would mark a multi-year high since 2007. Additionally, the 2-year yield stands at 5.08%, with an increase of 0.52%, while the 5-year yield stands at 4.48%, with an increase of 0.31%.

Ahead of Wednesday’s Federal Reserve (Fed) decisions, even as markets anticipate a pause, a hawkish tone from Chairman Powell could boost US yields and put further pressure on the gray metal. The US economy remains strong, driven mainly by the services sector, while the US labor market shows a mixed picture, and with the Fed wanting to see a cooling to mitigate inflation risks, it is likely to leave the door open for a final rise.

XAG/USD Levels to watch

Technical analysis of the daily chart suggests a neutral to bearish stance for XAG/USD as the bears struggle to rally. With a bearish trend below its midline, the Relative Strength Index (RSI) suggests that the bears’ momentum is strengthening, while the Moving Average Convergence (MACD) exhibits stagnant red bars. Furthermore, the pair is below the 20,100-day and 200-day SMA, implying that the bears remain in control on a larger scale, leaving buyers vulnerable.

Support levels: $23.00, $22.80, $22.50

Resistance levels: $23.50-$70 (convergence of the 200, 20 and 100 day SMAs), $24.00, $24.30

XAG/USD Daily Chart