Silver Price Analysis: XAG/USD struggles to defend $22.00 as market awaits Fed

• Silver fades bounce off 10-week low amid cautious mood.
• US CPI triggered relief rally but pre-Fed anxiety, Omicron woes test the commodity buyers.
• Risk catalysts stay in the driver’s seat amid a light calendar day, Fed’s vedict eyed.

Silver (XAG/USD) eases from an intraday high of $22.25, marking the failure to extend the bounce off late September levels.

The bright metal snapped a two-day downtrend to rebound from the multi-day bottom the previous day amid broad US dollar weakness. However, the market’s anxiety ahead of the week’s key central bank decisions weighs on the quote of late. Also challenging the commodity prices could be the fresh fears of the South African covid variant, dubbed as Omicron, as well as the US-China tussles concerning Taiwan and the phase one deal.

Global markets stayed positive on Friday even as the Consumer Price Index (CPI) flashed a fresh 39-year high. The reason could be linked to the inflation gauge’s matching of the broad consensus, which rejected fears of an unusually high price pressure than forecasted. That said, the US CPI matched expectations of 6.8% YoY, versus 6.2% prior, for November. Furthermore, stable inflation expectations, as revealed via the University of Michigan Consumer Sentiment Index, to 70.4 for December, added to the upside momentum of XAG/USD prices.

While the US inflation data triggered the market’s optimism, the return of the Fed rate hike woes seems to weigh on the quote by the press time. Even so, S&P 500 Futures rise 0.18% intraday while tracking the Wall Street benchmark’s rise to the fresh all-time.

It’s worth observing that the US 10-year Treasury yields remained sluggish around 1.50% and hence market players await more clues to extend the latest recovery of the silver prices.

Given the absence of the major data/events scheduled for release on Monday, covid updates and risk catalysts are crucial to watch for fresh impulse.

Technical analysis

The 10-DMA level surrounding $22.35 challenges silver’s corrective pullback from the latest multi-day bottom of $21.82. However, a clear upside break of the fortnight-old descending trend line keeps XAG/USD buyers hopeful.