Silver (XAG/USD) experienced a sharp decline of approximately 5% on Monday, dropping to its lowest level since early August. At the time of reporting, XAG/USD was trading around $61.08, pressured by a stronger US Dollar and surging US Treasury yields. The US 10-year Treasury yield climbed to 5.27%, marking its highest point since 2007, while the US Dollar Index (DXY) hovered near 101.25, close to a two-month high. These factors increased the opportunity cost of holding non-yielding assets like silver and made the metal more expensive for international buyers [1].
Market participants are currently pricing in a 70% probability of another Federal Reserve rate hike in October, following a 25 basis point increase at the September 15-16 meeting. This expectation is being fueled by persistent inflation concerns and a busy upcoming week of US economic data, including the PCE inflation report, ISM Manufacturing PMI, and Nonfarm Payrolls [1].
Technical analysis indicates that XAG/USD remains under significant downward pressure, with the 50-day, 100-day, and 200-day Simple Moving Averages (SMA) at $63.88, $65.65, and $73.19, respectively, acting as resistance levels. The price is currently just above the 61.8% Fibonacci retracement at $61.02, a critical support area. The Relative Strength Index (RSI) at 39 and a negative MACD reading further reinforce the bearish momentum. Immediate support is seen at $61.02, with further downside targets at $58.27 and $54.77, while resistance levels are identified at $62.95, $63.88, $64.87, $65.65, $67.26, $71.12, and $73.19 [1].
The market's focus now shifts to upcoming US economic data releases, which could further influence expectations for Federal Reserve policy and, consequently, silver prices [1].
CONCLUSION
Silver's 5% plunge to a two-month low reflects the impact of a stronger US Dollar, rising Treasury yields, and expectations of further Fed rate hikes. Technical indicators and market sentiment remain bearish, with key support and resistance levels in focus. Upcoming US economic data will be critical in shaping the next move for XAG/USD.