Silver (XAG/USD) continues its downward trend on Thursday, slipping below the $60 mark even as the US Dollar and Treasury yields show signs of easing. At the time of writing, XAG/USD is trading around $58.83, down 1.87% for the day and approaching two-month lows. The decline comes despite a slight retreat in the benchmark 10-year US Treasury yield, which has pulled back to around 5.30% after hitting a 21-year high of 5.36% on Wednesday. Elevated yields, fueled by inflation concerns and expectations of further Federal Reserve rate hikes, are increasing the opportunity cost of holding non-yielding assets like silver.
Technical indicators suggest a bearish outlook for silver. On the daily chart, XAG/USD remains below key moving averages, including the 50-day, 100-day, and 200-day Simple Moving Averages (SMAs). The Relative Strength Index (RSI) is drifting toward oversold territory, while the Moving Average Convergence Divergence (MACD) stays negative, reinforcing the downside pressure. Initial resistance is seen at the $60 level, followed by the 100-day and 50-day SMAs around $64.11-64.23. On the downside, strong support lies at $55.00, with a break below potentially opening the door to $50.00.
Silver is highly traded among investors, often used as a store of value or a hedge during high-inflation periods. Its price movements are influenced by factors such as geopolitical instability, interest rates, US Dollar strength, investment demand, and industrial usage. The metal is widely used in sectors like electronics and solar energy, with demand dynamics in the US, China, and India playing significant roles in price swings. Silver prices also tend to follow gold's movements, with the Gold/Silver ratio providing insights into their relative valuation.