Silver Price Analysis: XAG/USD trading at a loss, gains rejected at 100-day SMA amid US recovery

The XAG/USD witnessed a decline in Tuesday's session, trading around the $22.95 level, showcasing a 0.40% loss. The lingering influence of a stronger US dollar coupled with a risk-averse mood in the markets has contributed to the metal's downward trajectory. A key factor in this movement has been the price's failure to break past the 100-day Simple Moving Average (SMA) at $23.30, making the metal change directions during the American session.

The US Dollar is holding its ground as the US economy proves resilient, as demonstrated by the growth in Q4 and optimistic projections for Q1 2024. This relatively strong economy with sticky inflation concerns could prevent 5-6 predicted rate cuts in 2024 and limit the upside for the price as US Treasury yields may pick up, and the cost of opportunity of holding non-yielding metal would rise as well.

This week's spotlight is on inflation figures from the US, with the December Consumer Price Index (CPI) figures projected at a YoY rate of 3.2%, a slight increase from the previous 3.1%. Conversely, the annual core rate is anticipated to moderate to 3.8%, down from November's 4%. In case the core measure effectively eases, it could apply pressure on the USD and on US Treasuries and may provide a boost to the price.

As for now, US bond yields are mixed. The 2-year rate is seen at 4.38%, while the 5-year and 10-year yields are noted at 3.97% and 4.01%, respectively.

XAG/USD levels to watch

From a technical standpoint, the daily chart's indicators suggest the force of selling may have a slight upper hand in the short-term outlook, owing to the initial observations of the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). Despite a flat position, the RSI resides in negative territory, which ordinarily implies that sellers may have a mild edge.

Similarly, the MACD, producing rising red bars, adds some weight to the premise of a marginal bearish trend. The red bars on the MACD Histogram often imply that sell-side momentum could be gathering pace.

Allining with the near-term bearish signals, the bearish forces also appear to have macro control over the trend as the price trades below the 20,100,200-day Simple Moving Averages (SMAs).

XAG/USD daily chart