Silver (XAG/USD) rallied to a near three-year peak above $28.00 on strong demand fueled by falling US Treasury yields, a weaker US Dollar, and heightened geopolitical risks. The precious metal breached key resistance established in June 2021 and now eyes the May 2021 highs. Currently, XAG/USD trades at $28.00 after reaching a multi-month high of $28.32.
Drivers of Silver’s Rise
- Falling US Treasury Yields: A sharp decline in yields (the 10-year note lost 5 basis points) boosted precious metals.
- Weak US Dollar: The softer Greenback enhances the appeal of Silver.
- Geopolitical Tensions: Israel’s vow to eliminate Hamas and the group’s rejection of a ceasefire proposal increase demand for safe-haven assets like Silver.
- US Inflation Data: Markets anxiously await the release of the latest US Consumer Price Index (CPI) report, which could influence expectations around the Federal Reserve’s policy stance. While monthly CPI is expected to ease, the annual figure may exceed February’s data. Core CPI is forecast to decline on both monthly and yearly bases.
Fed Comments
Minnesota Fed President Neil Kashkari reiterated the need for the US central bank to remain resolute in fighting inflation.
Technical Outlook: Further Gains Possible, RSI Hints at Pullback
The daily chart indicates that XAG/USD could continue its ascent past $28.00, though the overbought Relative Strength Index (RSI) suggests a potential pullback for profit-taking. Short-term support lies at $27.50, followed by the April 8th low of $26.87. A resumption of the uptrend would open the way to retest $28.32 and potentially push towards $29.00.
