Silver Price (XAG/USD) Outlook: Path Towards $28 Gets Tougher On Rising US Consumer Inflation, Bond Yields

Silver price is currently trading lower in what has been a choppy day of trading for the XAG/USD pair. After starting the day’s session on the losing side, the white metal found some bullish momentum after US consumer inflation rose 0.8% monthly (versus consensus of 0.3% and previous of 0.6%). The rise in consumer inflation continues to stir up discussions about potential early tapering or a faster path towards US interest rate hikes. This notion is promoting USD strength among commodities this Wednesday, and this is what has pressurized silver prices on the day.

The rise in US long-term bond yields is also a factor in today’s price action. The US 10-year Treasury Note is trading more than 2.2% higher on the day, allowing capital to flow away from the non-yielding white metal and into the US bonds. Silver price is currently trading 0.53% lower. 

Technical Levels to Watch

Silver price is challenging resistance at the 27.502 price level. This is also where the upper boundary of the channel on the daily chart lies. This boundary is where intraday highs occurred. Therefore, the price activity has to transcend not just 27.502 but also this border for the path towards 28.073 to be cleared. Above this initial upside target lies the 28.359 and 29.00 price levels, with the latter matching highs last seen on 1 February.

On the other hand, a rejection at the channel’s upper border and the 27.502 resistance allows for a potential pullback towards 26.868. Favouring this outlook is the formation of a pinbar at this level.

A bearish outside day candle is required to confirm the downside, targeting the junction of the channel’s lower border and the 26.868 support. A breakdown of this area clears the path towards 26.624, with 26.325 and 26.034 also lining up as additional targets to the south if the decline is more extensive.

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Silver Price (XAG/USD) Daily Chart

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