Silver (XAG/USD) experienced a sharp reversal after reaching a two-month high of $71.12 on Friday, subsequently dropping below the $69.00 mark. This decline was triggered by Federal Reserve Chair Kevin Warsh's hawkish remarks during his Jackson Hole speech, which led to higher US Treasury yields and pressured the price of silver downward. At the time of reporting, XAG/USD was trading at $66.76, representing a 3.60% decrease [1].
From a technical perspective, the recent false breakout above $70.00 suggests the potential for a deeper pullback, despite silver maintaining a short-term upward bias. The Relative Strength Index (RSI) indicates that buyers still have some control, but the dip in RSI over the past two days signals that bullish momentum is waning [1].
For silver to resume its bullish trend, it must break above $70.00, which would expose the high of $71.12 and potentially the $72.00 level, with the 200-day Simple Moving Average (SMA) at $72.48 acting as further resistance. Conversely, a break below $66.00 could lead to a test of $65.00 and the 50-day SMA at $61.44, with the $60.00 psychological level below that [1].
The article also notes that silver's price is influenced by factors such as US dollar strength, interest rates, and industrial demand, but the immediate market reaction was driven by the Fed's hawkish stance and the resulting rise in Treasury yields [1].
CONCLUSION
Silver's price suffered a significant drop following hawkish comments from the Federal Reserve, reversing recent gains and highlighting the metal's sensitivity to monetary policy signals. Technical indicators suggest further downside risk unless key resistance levels are reclaimed. The market's reaction underscores the importance of Fed communications in shaping precious metal trends.