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- Silver price recovers a majority of its early losses and rebounds to near $84.00.
- Higher US bond yields and the US Dollar are expected to remain a major drag on the Silver price.
- The Fed is unlikely to cut interest rates in the next three policy meetings.
Silver price (XAG/USD) claws back a majority of its early losses and recovers to near its opening price around $84.00 during the European trading session on Monday. The white metal is expected to remain under pressure as higher United States (US) Treasury yields due to strengthening market speculation that the Federal Reserve (Fed) will not cut interest rates in the near term have diminished the appeal of non-yielding assets, such as Silver.
10-year US Treasury yields are up almost 2% around 4.22% during the press time. Higher yields on interest-bearing assets diminish the appeal of non-yielding assets.
According to the CME FedWatch tool, traders expect the Fed to leave interest rates unchanged in the next three policy meetings in March, April, and June. For the July policy meeting, the odds of the Fed holding interest rates steady have increased to 46.7% from 39.3% seen on Friday.
Traders have pared significant dovish Fed bets amid surging oil prices, which have already prompted global consumer inflation expectations. Meanwhile, the US gasoline prices reached an average of $3.41 per gallon on Saturday, according to The New York Times (NYT).
In addition to receding dovish Fed expectations, rising US Dollar (USD) due to roaring oil prices and firm safe-haven trade amid the Middle East war has also weighed on the US Dollar.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.5% higher to near 99.35.
Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
Silver technical analysis
XAG/USD trades slightly lower at around $83.90 at the press time. The near-term bias is neutral as spot trades close to the 20-day Exponential Moving Average (EMA), which has flattened near $84.75. Price action has been oscillating around this average for several sessions, signaling a lack of directional conviction after April’s sharp reversal from above $110.
The 14-day Relative Strength Index (RSI) wobbles inside the 40.00-60.00 zone, signaling a lack of strong buying pressure and favoring a defensive tone.
Nearest resistance emerges in the recent swing area around $90.00, where prior rebounds stalled. A daily close above $90.00 would be needed to ease the current downside bias and reopen the way toward the mid-$90s. On the downside, initial support sits near the recent $82.00 low, with a break exposing the $78.00 region as the next key floor. A sustained move below $78.00 would confirm a deeper corrective phase toward the mid-$70s zone.
