Silver Price Forecast: XAG/USD hits new monthly highs above $24.00, driven by falling US bond yields

• XAG/USD surpasses monthly highs amid positive market sentiment, despite the rising US Dollar.
• US Core PCE was below estimates, opening the door for a less aggressive Fed.
• XAG/USD Price Analysis: Expected to continue its rally and test the YTD high of $24.63

Silver price trades at new monthly highs above $24.00 a troy ounce, sponsored by falling US Treasury bond yields. Sentiment continues to be the main driver in the session, with US equities set to finish the month with gains. At the time of writing, the XAG/USD is trading at $24.10, gaining 0.89%.

Fed's Collins welcomed inflation data, but reiterated the Fed's has work left to do

Wall Street continues to print gains across the board. The greenback is pressured by data from the United States (US), which showed inflation tempering; therefore, less aggression by the US Federal Reserve (Fed) is needed.

The Department of Commerce (DoC) featured the Fed’s preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) for February, which rose by 4.6% YoY, below estimates of 4.7%, while the headline inflation dropped from 5.3% to 5% YoY.

Consequently, US Treasury bond yields edged lower, a tailwind for the white metal, which pushed through the $24.00 threshold for the first time since February 2. The US 10-year Treasury bond yield dropped four basis points (bps) at 3.516%, while US Real Yields stood at 1.26% as of March 30.

In the meantime, the University of Michigan (UoM) Consumer Sentiment for March was lower than expected, at 62, as opposed to the foreseen 67. Moreover, the survey updated that American consumers revised their inflation expectations downward. For the one-year horizon, the estimated inflation rate is 3.6%, while for the 5-year horizon, consumers estimate inflation to be 2.9%.

On the central bank side, Boston Fed’s President Susan Collins said that PCE inflation data is positive news, yet there’s still more work to do to bring inflation towards the 2% target.

XAG/USD Technical analysis

Given the backdrop, the XAG/USD is set to extend its rally and test the YTD high at $24.63. The Relative Strength Index (RSI), albeit at overbought conditions, backed the uptrend, while the Rate of Change (RoC) portrays buyers piled around the $22.00 area. The XAG/USD might consolidate as the RSI exits from overbought conditions, as buyers prepare to assault $25.00. if the XAG/USD clears $24.63, the psychological $25.00 barrier would be exposed. Once cleared, on April 18, 2022, resistance at $26.21 is next.