In today’s European session, the price of silver (XAG/USD) has taken a sharp downturn, plummeting to $28.40. This decline comes amidst robust upward momentum for the US Dollar, which has surged to a more than five-month high, reaching around 106.40. The strengthening of the US Dollar follows the release of strong United States Retail Sales data for March, intensifying speculation about the timing of potential interest rate cuts by the Federal Reserve (Fed).
Market sentiment, as reflected in S&P 500 futures, has turned bearish during the European session, indicating a decrease in risk appetite among investors. Meanwhile, 10-year US Treasury yields have climbed to a fresh five-month high, hovering around 4.63%. This upward movement in bond yields is driven by expectations that the Fed will postpone any rate cuts later this year. The US Dollar Index (DXY) has continued its winning streak, rising to 106.33 for the fifth consecutive trading session on Tuesday.
Federal Reserve policymakers currently perceive no immediate need for interest rate reductions. Mary Daly, President of the San Francisco Fed Bank, stressed the importance of maintaining restrictive monetary policy until there is confidence that inflation is moving towards the Fed’s target of 2%.
Despite the current downturn, the short-term outlook for silver remains optimistic amid concerns that tensions in the Middle East could escalate beyond Gaza. Following a cabinet meeting with Israeli Prime Minister Benjamin Netanyahu on Monday, Israel’s military Chief of Staff, Herzi Halev, asserted that they would retaliate against Iran’s recent attack on their territory. Over the weekend, Iran launched a significant offensive, deploying hundreds of drones and missiles in response to an Israeli strike on the Iranian embassy in Syria near Damascus, resulting in the deaths of two high-ranking generals.
Silver Technical Analysis
Silver prices are facing selling pressure as they strive to surpass horizontal resistance levels, particularly the barrier set from the high of August 3, 2020, at $29.86. Despite this near-term challenge, the long-term outlook for the white metal remains bullish, supported by the upward slope of the 20-week Exponential Moving Average (EMA), currently positioned at $24.85.
The 14-period Relative Strength Index (RSI) has entered into the bullish range of 60.00-80.00, indicating a robust upward momentum in silver prices.