Silver Price Analysis: XAG/USD falls to two-week low towards $23.00

• XAG/USD fell by more than 1.50% on Wednesday, near $23.00.
• US yields are rising after the release of US August ISM PMIs.
• CME FedWatch tool indicated that the odds of a hike by the Fed in November rose to 44%.

On Wednesday, the XAG/USD Silver Spot price closed near $23.00, as the reports of strong US economic activity fueled expectations of a more aggressive Federal Reserve (Fed) for the remainder of the year.

US bond yields sharply rose, often seen as the opportunity cost of holding non-yielding metals. The rate for the 2-year bond increased to 5%, whereas the rates for the 5-year and 10-year yields are at 4.43% and 4.30%, respectively. In addition, the USD measured by the DXY index turned its course north after the release of August's ISM PMI and increased above 105.00, presenting further challenges to the metal. In addition, the Fed’s Beige Book from July and August from the US reported slower economic growth while it pointed out that the job growth remained “subdued.”

In addition, Wall Street didn’t welcome the ISM figures, and the S&P 500 dropped by nearly 0.80% to its lowest level in a week. The Dow Jones Industrial Average (DJI) and the Nasdaq Composite (NDX) also decreased, with losses between 0.50-0.80%.

XAG/USD Levels to watch 

Analysing the daily chart, the XAG/USD technical outlook is bearish in the short term. The Relative Strength Index (RSI) is comfortably positioned below its midline in negative territory with a southward slope, indicating a favourable selling momentum, further supported by the negative signal from the Moving Average Convergence Divergence (MACD), which is displaying red bars, underscoring the growing bearish momentum. Additionally, the pair is below the 20-, 100- and 200-day Simple Moving Averages (SMA), pointing towards the prevailing strength of the bears in the larger context.

Furthermore, the four-hour chart flashes oversold signals, which could suggest that the metal may correct to the upside in the near term.

Support levels: $22.60, $22.30, $22.00

Resistance levels: $23.50 (20- and 200-day SMA convergence), $23.70, $24.00.

XAG/USD Daily Chart