Silver Tumbles On Greenback Strength

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Silver Tumbles On Greenback Strength

Silver (Xag/Usd) Tumbles To $29.00 On Greenback Strength

On the one hand, the Fed's decision to only deliver one rate cut this year has lent strength to the USD. On the other hand, the non-yielding assets, such as the Silver (XAG/USD), didn't react well to the news.

The Silver (XAG/USD) has fallen back towards the $29.00 support on Monday amid a hawkish Fed. Earlier, the Silver (XAG/USD) had managed to stage a recovery towards $29.60, but that is now mostly reversed.

Us 10-Year Yields At 4.24%

The white metal is under pressure now as the 10-year US bond yields have once again turned higher towards the 4.24% level. At the same time, the Fed has backtracked from its initial forecast of three rate cuts this year.

The current environment now favors assets that offer an attractive interest rate, such as the USD or the EURO. On the other hand, there's zero yield on the metals like Silver and Gold.

On Friday, Fed Austan Goolsbee said he was relieved after watching the producer inflation and consumer inflation reports. He added that the Fed needs data like this during the next coming months before it can commit to rate cuts.

Meanwhile, Fed Neel Kashkari has predicted that the US Federal Reserve will likely wait till the last month of 2024 to deliver the rate cut.

While the Fed now only eyes one rate cut, investors still believe that the first-rate cut is coming in September while the second one is in December.

look at the DXY shows that it is near 105.80, a 6-week high, which is a sign of the USD supremacy. Looking ahead, investors will be watching the US retail sales (May) which is expected to show a 0.3% growth in May against a flat reading in April.

The Silver (XAG/USD) is trading in a bearish channel, which means each pullback represents an opportunity for the bears.

In fact, Silver (XAG/USD) is also struggling to maintain its price action above the 200 EMA present at 29.40. This also adds a whole new equation of uncertainty to the Silver (XAG/USD) price action.

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