Silver gained momentum for the first time in four weeks on Friday following last week’s release of weak U.S Nonfarm payrolls, falling U.S treasury bon
Silver gained momentum for the first time in four weeks on Friday following last week’s release of weak U.S Nonfarm payrolls, falling U.S treasury bond yields and a softening dollar.
Right now, [[XAG/USD]] trades at $23.126 and between an intraday low of 23.118 and an intraday low of 23.126. This is good news because there seems to be less chance of a correction below last week’s $22 support. This also indicates a strong consolidation for bulls who are expecting short-term gains in their favour.
Silver Technical Analysis
[[XAG/USD]] is currently in a bullish trend. The RSI is at 45, which is in the neutral zone, but the MACD blue line has crossed the orange line from below, which is a bullish signal. The MACD blue line has also touched negative 0.015, which is a sign that the momentum is building. The Bollinger bands are narrowing towards the middle line, which is another sign of a bullish trend. The long green candle on the current price is also a bullish signal. The current price is at the middle Bollinger band and seems to be narrowing towards the midline, which suggests that the price is consolidating before moving higher.
However, there is a bearish pattern on the neckline of [[XAG/USD]] that has taken place on the 38.2% FIB retracement level. The bearish pattern indicates an M-Formation, which is usually a sign of an imminent downtrend. Nevertheless, the price of the Silver trading pair seems undeterred to retrace strong momentum to face and test $25.
The Federal President of San Francisco Mary Daly commented on the Fed’s commitment to curb inflation by introducing rate hikes. Therefore, market expectations due seem high for the USD. Besides, the opportunity cost for holding Silver or any other non-yielding asset is valuable given the rising interest rates. When interest rates rise, the opportunity cost of holding non-yielding assets like silver increases. This is because investors can earn a higher return by investing in assets that yield interest, such as bonds or savings accounts. As a result, they may be less willing to hold silver, which could lead to a decline in the price of silver.
Inflation rates
The inflation report is an important indicator of the future direction of interest rates. If the inflation report indicates higher-than-expected inflation, it could reinforce the likelihood of interest rate hikes. This could lead to a decline in the price of silver, as investors move their money into assets that yield interest.
However, it is important to note that there are other factors that could also affect the price of silver. For example, if the report also indicates that the economy is growing strongly, it could lead to an increase in demand for silver, which could offset the decline in the price caused by rising interest rates.
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