Silver Price Analysis: XAG/USD sinks as investors digest Powell’s words and US data

• Silver XAG/USD drops more than 1%, around $22.30
• The Fed’s Jerome Powell was hawkish on Thursday, fueling US bond yields.
• Markets are pricing rates at restrictive levels for a longer period.
• In the US, consumer sentiment data was lower than expected.

At the end of the week, the XAG/USD plummeted towards $22.30 and will close with a weekly loss of 3%, driven mainly by the recovery of the US dollar and yields throughout the week, which put downward pressure on metal prices.

After the dollar weakened following the maintenance of rates by the Federal Reserve (Fed) last week, which markets interpreted as the entity was reaching the end of its cycle, and the publication of a weak employment report October, the Dollar recovered in recent sessions. This was due to the intervention of Fed hawks and Chairman Powell’s assertion that the bank’s job was not done, driving US bond yields higher.

In line with this, Treasury yields, often seen as the cost of holding non-yielding metals, rebounded after hitting multi-week lows last week, and on Thursday, jumped back toward their highest levels. in November, which made holding Silver lose interest.

On the data front, the University of Michigan showed that the US November Michigan Consumer Sentiment Index came in below expectations at 60.4, versus the consensus of 63.7 and declined from its previous reading of 63.8. In reaction, the negative figures seem to be limiting the gains of the USD, whose DXY index is trading neutral at 105.90.

XAG/USD Levels to watch

From a technical point of view, XAG/USD maintains a short-term bearish trend, as seen on the daily chart. The Relative Strength Index (RSI) is comfortably positioned in the negative territory below its midline and is sloping southwards, complemented by a negative signal from the Moving Average Convergence Divergence (MACD), which is showing red bars, signaling growing bearish momentum. On the other hand, the pair is below the 20,100,200-day SMA, implying that the bears remain in control on a larger scale.

Resistance levels: $22.90 (20-day SMA), $23.00, $23.30 (convergence of 100-day and 200-day SMA).
Support levels: $22.30, $22.15, $22.00.

XAG/USD Daily Chart