Silver Drops As Us Yields Gain Traction

 Silver Drops As Us Yields Gain Traction

Silver (XAG/USD) Drops Under $24.00 As US Yields Gain Traction

The Silver metal (XAG/USD) is on the back foot and has already lost the $24.00 handle with a -0.78% change for the day. The reason behind the drop in Silver prices is that the USD remains well-bid, which means the funds are moving out of risky assets.

The US Dollar is back in the limelight once again as an official from the Federal Reserve has made it clear that it is still premature to discuss policy easing. As a result, the US bond yields have turned green for the day, which is sending assets like Silver and gold lower.

NY Fed President Discards Rate Cut Talks

For now, the Silver (XAG/USD) is trading near $23.97 before briefly touching the $24.28 (daily high). Despite the pullback from daily highs, the sentiment surrounding the Silver metal is still bullish.

It looks like the comments from Fed President (NY) John Williams was an act of 'damage control'. It became important as the markets viewed the comments from Jerome Powell as a sign of policy easing.

Fed's William made it clear that there are no talks about the prospects of rate cuts at all. In addition, they also added any rate cuts in March 2024 are still too soon!

If we look at the data, it shows that industrial production in the USA has declined by -0.2%. A month earlier, the decline was only 0.009%, which suggests that things have turned worse.

Another piece of data released by the S&P Global shows an improvement in the business activity. On the one hand, the manufacturing sector is showing signs of contraction while the services sector is showing some optimism.

However, the real factor that is sending the XAG/USD lower is the US bond yields, which have moved from 1.67% to 1.70%.

For now, the XAG/USD outlook is neutral with a chance of potential upside as the metal is still trading above all the major moving averages on the D1 chart.

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