Silver rallies above $21.50 on sliding Treasury yields

Silver price is rallying more than 2% in the day amidst falling US Treasury yields. Market sentiment has improved during the US session, a headwind for the dollar.

Silver holds ground for the last two trading days and advances firmly in the US session, almost 2% up, and is closing at around the $21.50 mark, boosted by retreating Treasury yields. The Silver Index is surging sharply and is trading at $21.53.

Treasury yields remain pressured, led by the 10-year benchmark note sitting at 2.879%, dropping four-and-half basis points, a headwind for the dollar. The US Dollar Index, a gauge of the dollar’s value versus a basket of peers, declines sharply from around daily highs and is at 104.367, down 0.19%.

Late in the session, market sentiment shifted positive, despite European stocks finishing with losses. Despite investors’ growing concerns that an aggressive Federal Reserve could cause recession, US equities are recording gains during the day. China is struggling with Covid-19 lockdowns, so the global economic recovery is at stake.

Earlier in the US session, the New York Fed President John Williams expressed that the number one issue for the Fed is inflation, and it is running far too high and stubbornly persistent. Williams stated that 50-bps rate hikes make sense at upcoming meetings

The US economic docket would feature additional Fed speaking led by Fed Chair Jerome Powell on Tuesday. Regarding macroeconomic data, April’s Retail Sales, Industrial Production, Building Permits, and Initial Jobless Claims would shed some light regarding the actual economic status of the United States.


The jump from the oversold territory of the Relative Strength Index (RSI) at 35.04 could add some support to the bounce at the YTD lows around $20.45, but unless it breaks the RSI’s trendline drawn at around the 50-midline, XAG/USD remains downward pressured. Silver’s first support would be $21.00. Break below would expose the YTD low at $20.45. Once cleared, the next support would be July 17, 2020, at a daily low at $18.93.

Technically, silver is still downward biased, despite rallying in the last couple of days. The daily moving averages (DMAs) are still above the spot price, meaning that bears are in control unless silver bulls conquer February’s 3 pivot low at around $22.00, which would mean that the trend would shift from bearish to neutral-bearish.