Silver Price Forecast: XAGUSD ascends around $20.00 despite improved mood, as US bond yields reverse

• Silver price clings to the $20.00 figure, despite a risk-on market mood.
• Upbeat US Non-Manufacturing PMI data keeps investors’ spirits high, that the US could dodge a recession.
• Fed officials emphasized their commitment to bringing inflation down.

Silver prices are pressing against the $20.00 figure after tumbling on Tuesday due to US dollar appreciation amidst a gloomy market mood spurred by geopolitical tensions between the US and China. Nevertheless, on Wednesday, the white metal stages a comeback, though it’s facing solid resistance with the 50-day EMA lingering around the $20.43 mark. At the time of writing, XAGUSD is trading at $20.00.

Silver recovers as US bond yields retrace from daily highs

Sentiment improved throughout the day. US equities rally propelled by company earnings, whilst safe-haven assets, particularly precious metals, are taking a breather, recovering from earlier losses, as US Treasury yields remain elevated on Fed’s hawkish commentary.

In the meantime, US economic data, with the July ISM Non-Manufacturing PMI, showed that businesses are holding the fort, with the index rising to 56.7, more than estimated and higher than June’s 55.9. That pares back expectations of a recessionary scenario, which augmented when the ISM Manufacturing PMI expanded at its slowest pace in two years.

Aside from this, the Fed parade continued. Earlier during the day, the uber-hawk St. Louis Fed President Bullard said that he wants to get rates by the end of the year, around 3.75-4.00%. He added that the Fed “is going to move inflation back to 2% over time.” Later, San Francisco’s Fed Daly said she’s open to lifting rates by 50 or 75 bps, but it would depend on inflation data.

The buck’s reaction to the abovementioned factors had been positive, as shown by the US Dollar Index, rising 0.14%, at 106.483. Lately, US Treasury bond yields are receding from daily highs, one of the reasons silver prices are recovering, with the 10-year bond rate at 2.763%, almost flat.

What to watch

The US economic docket will feature Thursday employment data led by Initial Jobless Claims, alongside other Fed policymakers taking the spotlight. Then, silver traders’ focus will move to Friday’s Nonfarm Payrolls report.

Silver (XAGUSD) Key Technical Levels