Silver Price Forecast: XAG/USD plunges to fresh three-week lows as US T-bond yields skyrocket

• Silver price plummets more than 2.50% due to overall US dollar strength.
• US Treasury bond yields rise, a headwind for the white metal.
• Silver Price Analysis: Once it falls below $18.00, a test of the YTD lows at $17.56 is on the cards.

Silver price slides to fresh three-week lows below $19.00, as US Treasury bond yields are rising sharply, with the US 10-year T-note rate hitting 3.90%, for the first time since April 2010, when the benchmark note fell from the 4% threshold. At the time of writing, XAG/USD exchanges hands at $18.35, below its opening price by 2.51%.

Risk aversion keeps global equities in the red, courtesy of the past week’s 500 bps of central bank interest rate increases as recession fears grow. Global bond yields are rising as the bond sell-off continues. US Treasury yields in the short end of the curve rose above 4%, while the US 10-year benchmark rate hit a daily high of around 3.90%.

XAG/USD plunges on high US T-bond yields

Money market futures are discounting a 75 bps rate hike at the Fed’s November meeting, a headwind for the white metal. In the meantime, Fed officials led by Atlanta’s Fed President Bostic and  Boston Susan Collins crossed news wires.

On Sunday, Raphael Bostic commented that he believes the Fed can temper inflation without triggering substantial job market losses. He reassured that inflation is “too high,” emphasizing the need to control it.

During the last hour, Bostic crossed wires, acknowledging that events in the UK might put additional stress on Europe and the US in the already tense financial markets. In the meantime, the newest President of the Boston Fed, Susan Collins, commented that the unemployment rate needs to increase so that the US central bank can achieve its inflation goal. She added that she would like “clear and convincing signs” that inflation is cooling and that achieving a soft landing “while challenging, is achievable.”

Even though, Collins said, “a significant economic or geopolitical event could push our economy into a recession as policy tightens further.”

Elsewhere, the US Dollar Index, a measure of the buck’s performance vs. six rivals, edges higher by almost 1%, at 114.159, weighing on the US dollar-denominated silver.

From a technical perspective, it’s worth noting that XAG/USD tumbled below the 20-day EMA of $18.83, exacerbating a fall towards the $18.30s area. Furthermore, the Relative Strength Index (RSI). Shifted negatively, signaling that sellers are gathering momentum. Therefore, if XAG/USD breaks below the $18.00 figure, we could expect a re-test of the YTD lows at around $17.56 in the near- term.

Silver Daily Chart

Silver Key Technical Levels