Silver Price Forecast: XAG/USD falls amid US consumer sentiment boost, high US yields

• Silver holds ground at $22.50, resilient amid losses, finding strong support at this key level.
• US Consumer Sentiment boost lifts US Treasury yields, affecting XAG/USD dynamics.
• Mixed economic signals: Wall Street gains, but US Existing Home Sales hit 13-year low; improved inflation outlook.

Silver price is extending its losses for the third time in the week and faces solid support at around familiar levels, with sellers unable to decisively push prices below the $22.50 figure. Sentiment improvement amongst US consumers spurred a jump in US Treasury yields. At the time of writing, the XAG/USD trades at $22.50, down 0.99%.

XAG/USD holds ground at $22.50 despite Treasury yields surge

Wall Street trades solidly in the green while US Treasury bond yields advance. Despite that, the US Dollar Index (DXY), which measures the buck’s value against a basket of six currencies, is virtually unchanged at 103.41.

Data-wise, US Existing Home Sales fell to their lowest level over 13 years, slumping -1 % MoM to 3.78 million from 3.82 million the previous months and forecasts. At the same time, US households became more optimistic about the economic and inflation outlook, revealed the University of Michigan (UoM): The UoM Consumer Sentiment on its preliminary reading for January rose by 78.8, exceeding forecasts and last month’s 69.7 increase. Moreover, Americans expect inflation to tick lower in 12 months from now, from 3.1% to 2.9%, and for five years, cooled from 2.9% to 2.8%.

Following the data, the US 10-year Treasury note yield soared toward 4.196% before stabilizing at around 4.163%, a headwind for precious metals, which usually benefit from lower yields.

In the meantime, Chicago’s Fed President Austan Goolsbee said they need more data before cutting rates to determine the level of restrictiveness.

Ahead of the day, the San Franciso Fed President Mary Daly is expected to cross wires ahead of the blackout period, which is ahead of the first monetary policy meeting of 2024.

XAG/USD Price Analysis: Technical outlook

From a technical standpoint, Silver has consolidated above/below the $22.50 area, which, once decisively broken to the downside, should expose the next support level seen at the November 13 cycle low of $21.88. Further losses are seen, once surpassed with the next swing at at$20.69, the October 3 low. On the other hand, if buyers lift XAG/USD above the $23.00 figure, that would expose key resistance levels seen at $23.17, the 100-day moving average (DMA), followed by the 200 and 50-DMAs, each at $23.54 and $23.66, respectively.