Silver Price Analysis: XAG/USD continues to trade vulnerable below $23.00

• XAG/USD stands near $22.70, while bears still have the upperhand.
• The USD weakened following two consecutive sessions of strength.
• US Treasury yields stand mixed ahead of inflation data from the US from July.

In Wednesday's session, the Silver spot price XAG/USD traded with mild losses, while the USD traded weaker and corrected after two days of strength. Markets remain quiet ahead of crucial Consumer Price Index (CPI) data from the US from July, which will impact bond and metal price dynamics.

Considering this, the US bond yields showed a mixed performance on Wednesday. The 10-year bond yield trades at 4.01%, seeing 0.23 % losses on the day, while the 2-year yield stands at 4.76% with 0.12 % gains and the 5-year yielding 4.10%, seeing mild losses.

In terms of the next Federal Reserve (Fed) following monetary policy decisions, tightening expectations have risen. According to World Interest Rate Possibilities (WIRP) tool, the markets are currently pricing in a 15% chance of a 25 bps hike in the September meeting, while those odds rise to 30% in November. It will all come down to the incoming data, as Jerome Powell stated during the press conference after the last Fed decision.

It's worth noticing that higher interest rates tend to be negatively correlated with non-yielding precious metal prices, so traders will keep a close eye on Thursday’s CPI data from the US. 

XAG/USD Levels to watch

The daily chart analysis indicates a bearish outlook for the XAG/USD in the short term. The Relative Strength Index (RSI) is below its midline in negative territory, with a negative slope, aligning with the negative signal from the Moving Average Convergence Divergence (MACD), displaying red bars, reinforcing the strong bearish sentiment. Moreover, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), supporting the idea that the bears are in command in the bigger picture.

Support levels: $22.50, $22.30, $22.00. 

Resistance levels:  $23.25 (200-day SMA), $23.50, $23.70, $24.00.

XAG/USD Daily chart