Silver Price Forecast: XAG/USD falls below the 50% Fibo, though a golden cross looms
|- Silver is set to finish the week with losses of almost 3%.
- The market sentiment dampened as peace talks between Russia and Ukraine remained stuck.
- Fed’s Bullard: Wants to implement a balance-sheet reduction and would like rates above 3% in 2022.
- Fed’s Waller: Current data “is basically screaming at us to go for 50 basis points.”
Silver (XAG/USD) slides as the weekend looms in the New York session, down 1.19% amid a risk-off mood that strikes the market, with European and US equities trading with losses, courtesy of mixed signals from peace talks between Russia and Ukraine. At $25.11, XAG/USD does not reflect the safe-haven status of the white metal.
The greenback is advancing in the day, as the US Dollar Index reflects it, sitting at 98.45, up 0.46%, a headwind for silver prices. Contrarily, US Treasury yields are falling, leading by the curve’s long-end, while 2s are rising, sitting at 1.950%.
Discussions in Eastern Europe stuck, Fed speaking grabs market attention
The Russia – Ukraine conflict extends for the third consecutive week as hostilities continue. Peace talks between both sides have reached a point of advance, though not at the speed hoped by market participants, meaning that going towards the weekend, a flight to safe-haven assets might be on the cards.
In the US, the Fed hiked rates on Wednesday 25 basis points. Now that the blackout period ended, the only dissenter which pushed for a 50 bps hike, St. Louis President Bullard, said that he wanted the Fed to implement a balance-sheet reduction and recommended the committee to achieve a level of rates above 3% in this year.
Late in the same tone, Fed Governor Christopher Waller said that he prefers greater rate hikes and would favor “50 basis points at one or multiple meetings in the near future.” Furthermore, he noted that current data “is basically screaming at us to go for 50 basis points,” though the Russia-Ukraine conflict calls for caution.
Meanwhile, the US economic docket featured Existing Home Sales for February came at 6.02M lower than the 6.1M foreseen, while the Consumer Board (CB) Leading Index rose by 0.3%, higher than the 0.2% estimated.
XAG/USD Price Forecast: Technical outlook
Silver is still upward biased as shown by the daily chart and the moving averages, with the 50-DMA about to cross over the 200-DMA, forming a golden cross with bullish implications. However, the RSI at 54.08, aiming low, suggests that XAG/USD might print another leg down before resuming the uptrend.
XAG/USD’s first resistance is the 50% Fibonacci level at $25.39. Breach of the latter would expose the 38.2% Fibonacci at $25.76, followed by the August 4, 2021 high at $26.00 and the YTD high at $26.94.
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