Silver Price Analysis: XAG/USD clears daily gains as the USD recovers

• XAG/USD trades flat, around $22.90, after peaking at a high around $23.15.
• US Manufacturing and Services PMIs lived up to expectations, while the European figures disappointed.
• Rising US Treasury yields favoured the downward movements. Hawkish bets on the Fed are still low.
   

In Tuesday’s session, the XAG/USD struggled to gather momentum as the USD traded strong against its rivals after the release of strong S&P Global PMIs. As a reaction, US Treasury yields slightly rose but hawkish bets on the Federal Reserve (Fed) still remain low, which could limit the losses for the grey metal. The US will release additional high-tier figures this week, and Chair Powell will speak on Wednesday.

The S&P Global Manufacturing PMI from October from the US came in at 50, beating the expected 49.5 and rising from its previous figure of 49.8. The Services Index also met expectations, coming in at 50.9, beating the consensus of 49.8 and increasing to expansion territory concerning its last reading of 50.1 and both indexes suggest an optimistic and robust outlook for the US economy.

As a reaction, the USD measured by the DXY index rose from a low of 105.35 towards 106.20, fueled by rising US yields. However, hawkish bets on the Federal Reserve (Fed) remain low, which could limit the upside potential for the green currency. Additional catalysts include key data to be released this week, consisting of Personal Consumption Expenditures figures on Friday, which is expected to have decelerated in September and with the Core PCE Price, the Fed’s preferred gauge of inflation, expected to come in at 3.7% YoY from the previous 3.9%. In addition, Gross Domestic Product (GDP) is expected to have significantly risen in Q3 with an annualised rate growth of 4.2%.

XAG/USD Levels to watch 

 Observing the daily chart, the outlook is neutral to bullish for the short term as the metal may continue consolidating the recent movements using the convergence of the 100 and 200-day Simple Moving Averages (SMA) as a resistances around $23.30. Meanwhile, the Relative Strength Index (RSI) shows a flat slope above its midline, while the Moving Average Convergence (MACD) lays out lower green bars.

As long as the bulls fail to conquer the $23.30 area, the outlook on the broader outlook will favour the bears.

 Support levels: $22.65, $22.50, $22.30.

 Resistance levels: $23.30, $23.50, $23.70.

XAG/USD Daily Chart