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Silver Price hovers around $18.00 amid bad sentiment

The price of silver is off to a strong start this week, up 0.30% so far. The G7 ministers have imposed a cap on the price of Russian oil, and Russia has stopped exporting gas, which is making Europe’s energy issues much worse. Real rates in the US are still more than 0.70 percent, but they are over ten basis points (bps) down from the day’s highs.

Despite low liquidity circumstances due to the fact that US markets were closed for Labor Day, the price of silver managed to claw back some lost ground on Monday, rising by more than 0.50%. In the meanwhile, the energy situation in the common union is becoming worse since Gazprom has stopped delivering gas to Europe as a form of retribution for a G7 summit that set a quota on Russian oil. As this article is being written, the XAG/USD exchange rate is now trading at $18.08, which is higher than its starting price.

As a reflection of the worsening global situation, equity markets throughout the world are trading in the red. The US employment statistics from the previous week, which included Nonfarm Payrolls above estimates, downward reviews, and an increase in the unemployment rate of 3.7%, decreased the likelihood of an aggressive Federal Reserve policy stance.

The US Dollar index reached a new high point in the last 20 years at around $110.27, which caused the EUR/USD to plunge below the 0.9900 figure, while the price of the white metal edged lower but remained higher than its opening price. The US 10-year TIPS, which is a proxy for real yields and gauges the 10-year nominal yield minus inflation expectations, is still positive but has come off the highs of the day at 0.827% and is now trading at 0.729%; this is a tailwind for the Silver/USD pair.

Silver

Fed speakers, including Cleveland President Loretta Mester on Wednesday and Jerome Powell’s speech on Thursday, are scheduled to appear on the agenda for the United States. In addition, investors will be keeping a close watch on jobless claims for the week ending September 2, as well as the S&P Global and ISM Services PMI indices, in order to get insight into the state of the United States economy.

Silver Price Forecast (XAG/USD): Technical outlook

Despite the recent rebound from the yearly lows at $17.56, the Silver/US Dollar exchange rate is still neutral to bearishly skewed. However, in order to open the door for a re-test of the confluence of the 20- and 50-day moving averages at roughly $19.25-40, a break above the low that was reached on July 14 at $18.14 is required. A continuation to the downside and another attempt to break below the YTD low may be anticipated if this scenario does not play out. The lows for June 2020 are projected to reach $16.95.

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