Silver Bears Gain Ground as Dollar Strength Weighs on Non-Yielding Metal

Silver prices are under pressure to drop further due to a stronger US Dollar and higher US Treasury yields. The metal's non-yielding nature makes it vulnerable to rising interest rates, which is currently priced in by traders at an 86% probability for the Federal Reserve's September 15-16 monetary policy meeting.

The recent US inflation data showed headline Consumer Price Index (CPI) accelerating to 0.4% MoM in August, while core CPI rose 0.3%. Rising Oil prices amid escalating tension in the Middle East add to the upside risks to inflation and put pressure on the Fed to raise borrowing costs.

The head-and-shoulders pattern on the daily chart of XAG/USD has its neckline near the 50-day Simple Moving Average (SMA) at $62. A daily close below this level would confirm the bearish formation and open the door to a deeper decline.