Silver, XAG/USD, US Dollar, US Treasury Yields – Talking Points
- Silver pushes above trendline resistance but retreats into the end of the session
- USD weakness offset by the highest 10-year US Treasury yield since May
- Descending broadening channel potentially hints at reversal for XAG/USD
Silver prices gained by almost 4% during Tuesday’s session before retreating as the US Dollar gave back some of its recent gains. Silver has been under significant pressure for the last few months as market participants continue to posture ahead of the upcoming Fed taper of asset purchases. Higher US Treasury yields has provided ample downward pressure on precious metals, with Silver sinking to a fresh yearly low in late September.
Despite the headwinds associated with tapering and the prospect of higher Treasury yields, silver has performed well of late, crucially retaking the $22.50 level before extending higher to current levels. Upside for XAG/USD remains limited, however, as a break of multi-month trendline resistance is required for further gains to materialize. Price briefly broke above this resistance on Tuesday, before retreating back to familiar territory.
Silver Daily Chart
Without a close above trendline resistance, the downtrend remains intact for silver despite the recent bounce. Should price fail to break higher, market participants may look to the $22.50 level for immediate support. Below that lies multi-month trendline support, the lower bound of a descending broadening channel. Traders may look to this pattern as a signal for a reversal of the recent downtrend, but a break of the overhead wedge resistance must materialize first for any such move to come to fruition.
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— Written by Brendan Fagan, Intern
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