Silver Price Forecast: XAG/USD steadily around $18.00 amid sour sentiment

• Silver price begins the week on the right foot, up by 0.30%.
• Europe’s energy crises worsen as G7 ministers put a lid on Russian oil prices while Russia halts gas exports.
• Real yields in the US remain above the 0.70% threshold but almost ten bps off the day’s highs.

Silver price regained some composture advancing more than 0.50% on Monday, despite thin liquidity conditions, with US markets closed for Labor Day. Meanwhile, the common bloc energy crisis worsens with Gazprom halting gas deliveries to Europe as retaliation after a G7 meeting put a cap on Russian oil. At the time of writing, the XAG/USD is trading at $18.08, above its opening price.

Global equities are trading in the red, reflecting the market deterioration. Last week US employment data, with Nonfarm Payrolls exceeding expectations, downward reviews, and the unemployment rate increasing by 3.7%, diminished the odds of an aggressive Federal Reserve.

The US Dollar index refreshed 20-year highs at around $110.27, sending the EUR/USD tumbling below the 0.9900 figure, though the white metal edged lower but above its opening price. The US 10-year TIPS, a proxy for real yields, which measures the 10-year nominal yield minus inflation expectations, remains positive but off the highs of the day around 0.827%, at 0.729%, a tailwind for XAG/USD.

What to watch

The US docket will feature Fed speakers with Cleveland President Loretta Mester on Wednesday and Jerome Powell’s speech on Thursday. Also, unemployment claims for the week ending on September 2, alongside the S&P Global and ISM Services PMI, would be eyed by investors, looking for clues of how the US economy fares.

Silver Price Forecast (XAG/USD): Technical outlook

XAG/USD remains neutral to downward biased, despite the recent jump off YTD lows at $17.56. Nevertheless, a break above the July 14 low at $18.14 is needed to open the door to a re-test of the confluence of the 20-50-DMAs, at around $19.25-40. Otherwise, expect a resumption to the downside and another attempt to break below the YTD low on its way towards June 2020 lows at $16.95.