Silver Price Forecast: XAG/USD slumps to near $30 as traders reassess Fed’s interest rate outlook
LONDON (January 13) Silver price (XAG/USD) falls sharply to near $30.00 after failing to extend its upside above the key hurdle of $30.60 in Monday’s European session. The white metal weakens as the US bond yields strengthens, with market participants reassessing their expectations for the Federal Reserve’s (Fed) monetary policy outlook after the release of the United States (US) Nonfarm Payrolls (NFP) data for December.
10-year US Treasury yields post fresh yearly high to near 4.80% as traders have pared Fed dovish bets after the release of the surprisingly upbeat labor market data. Higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, as they result in higher opportunity costs for them. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh two-year high above 110.00.
According to the CME FedWatch tool, the Fed is expected to keep interest rates unchanged in the current range of 4.25%-4.50% atleast in the next three policy meetings.
Meanwhile, the broader outlook of the Silver price remains firm as the market sentiment is bearish amid uncertainty over the incoming trade policies under the administration of US President-elect Donald Trump. The appeal of non-yielding assets strengthens in a highly uncertain environment.
This week, investors will focus on the US Consumer Price Index (CPI) data for December, which will be published on Wednesday.
Silver technical analysis
Silver price continues to face selling pressure near the 50-day Exponential Moving Average (EMA), which trades near $30.35. The white metal remains below the upward-sloping trendline around $30.50 on a daily timeframe, which is plotted from the February 29 low of $22.30
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.
Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the December 12 high of $32.33 would be the barrier.
FXStreet
