Silver Price Analysis: XAG/USD tests $24.00 area, eyes 200DMA at $23.87, weighed by US dollar/yield rally

• Recent US bond yields and dollar upside has weighed heavily on silver.
• XAG/USD hit fresh one-month lows and came close to hitting $24.00 earlier but has since recovered to near $24.30.
• The bears are eyeing a break under $24.00 and a test of the 200DMA at $23.87 just below it.

Recent upside in US and global government bond yields, catalysted primarily by hawkish Fed commentary on Thursday from Chairman Jerome Powell and other bank policymakers, plus further upside in the US dollar that has seen the DXY momentarily hit fresh annual highs above 101.00 has weighed heavily on spot (XAG/USD) silver prices on Friday.

XAG/USD at one point went as low as $24.05 per troy ounce to print fresh lows for the month and eye March’s lows at $23.97, but has since rebounded back to around $24.30, where it still trades with on the day losses of about 1.4%. The rebound from lows was facilitated by a pullback in the DXY to the 100.80s, and amid buying ahead of the 200-Day Moving Average at $23.87.

The Fed will enter blackout this weekend ahead of the 3-4 May policy meeting. Various banks have been upping their calls for Fed tightening in recent days in wake of recent rhetoric, with Nomura notably calling for a 50 bps move in May followed by two 75 bps hikes at the next two meetings in June and July.

While there won’t be fresh Fed rhetoric to pump expectations for tightening before the next meeting, that doesn’t mean US yields and the US dollar won’t continue trading with an upside bias, as has been the case now for many consecutive weeks. Should that continue, a breakdown in XAG/USD below the $24.00 level and its 200DMA is on the cards. Looking ahead, a potential catalyst for some price action could come in the form of Friday’s flash US PMI survey results for April, which are scheduled for release at 1445BST.