XAG/USD hovers cautiously around the $30 mark amid a highly volatile market environment
FUNDAMENTAL OVERVIEW:
- Silver prices remain steady near $30.00, trading cautiously as the US Dollar strengthens amid a tense market atmosphere.
- A global sell-off in technology stocks has bolstered the Dollar’s attractiveness while rising US bond yields reflect expectations that the Federal Reserve will maintain its current interest rate policy.
Silver price (XAG/USD) trims some of its intraday losses and attempts to defend the critical $30.00 level during Tuesday’s European session. The white metal traded cautiously amid gloomy market sentiment, driven by heightened risk aversion. A steep sell-off in global technology, power, and data center stocks has unsettled markets, fuelled by concerns that China’s Deepseek low-cost AI model could disrupt the dominance of leading chatbots like OpenAI and Meta.
From a technical perspective, precious metals generally gain appeal in times of heightened market risk. However, Silver’s upside remains capped due to a strong rally in the US Dollar (USD) and rising bond yields. The safe-haven demand for the USD has surged sharply amidst the sell-off in tech stocks. The US Dollar Index (DXY), which measures the Greenback’s performance against six major currencies, has climbed near the 108.00 level.
The 10-year US Treasury yields surged to approximately 4.56% ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. According to the CME FedWatch tool, the Fed is widely expected to temporarily pause its policy-easing cycle and keep interest rates steady within the 4.25%-4.50% range.
Investors will closely monitor Fed Chair Jerome Powell’s press conference for insights into how long the central bank plans to maintain current borrowing rates. Additionally, market participants are eager to assess the potential impact of proposed tariffs by President Donald Trump on the Fed’s monetary policy approach and the broader economy.
XAG/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Silver is trading within an up channel.
Silver is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 30.80
Immediate support level: 30.00
HOW TO TRADE XAG/USD
Silver initially extended its upside move on a higher time frame but encountered resistance, leading to a reversal and a break below a critical support zone. Silver is consolidating around this key support level and exhibiting signs of weakness. Further downside movement could be expected if it decisively breaks below this support.