Silver price plunges as elevated US yields, firm Dollar pressure XAG/USD

• Silver falls more than 4% on Monday, pressured by elevated US Treasury yields.
• Surging Oil prices fuel inflation concerns and reinforce expectations of further interest rate hikes.
• The US Dollar remains supported by a restrictive monetary policy outlook and persistent geopolitical uncertainty.

Silver (XAG/USD) falls sharply on Monday, losing 4.53% on the day to trade around $61.40 at the time of writing. The precious metal faces heavy selling pressure as elevated United States (US) Treasury yields and growing expectations of further interest rate hikes weigh on non-yielding assets.

Higher Oil prices remain at the center of investors' concerns. Persistent disruptions to global energy supplies are fueling risks of more persistent inflation in the US, potentially forcing the Federal Reserve (Fed) to maintain a restrictive monetary policy stance for longer than previously expected.

Money markets now price in around a 68% chance of another interest rate hike at the Fed's October meeting, according to the CME FedWatch tool. These expectations follow the US central bank's rate increase in September and recent hawkish comments from several Fed officials.

US Treasury yields benefit directly from this reassessment of the monetary policy outlook. The benchmark 10-year US Treasury yield trades close to its highest level in nearly two decades, increasing the opportunity cost of holding precious metals that offer no interest. This dynamic contributes to Silver's sharp decline on Monday.

Geopolitical tensions and their implications for global energy supplies also keep Oil prices elevated. At the same time, this environment provides support to the safe-haven US Dollar (USD), adding further downward pressure on XAG/USD.

Attention now turns to upcoming US economic data, which will allow investors to refine their expectations for the interest rate outlook. US employment figures due on Friday will be particularly closely watched, while inflation and activity indicators released this week could also influence expectations surrounding the Fed's next policy decisions.

XAG/USD technical analysis

In the four-hour chart, XAG/USD trades at $61.38, extending its slide below the 100-period simple moving average (SMA) at $64.99 and the 200-period SMA at $65.88, which reinforces a bearish near-term bias. The break under prior mapped levels leaves price trading closer to the lower end of the recent range, while the Relative Strength Index (14) around 29 hints at oversold conditions that could slow immediate downside but have yet to challenge the prevailing bearish structure.

On the topside, initial resistance is seen at $62.30, followed by $62.85 and $63.33, with a more substantial cap emerging near the horizontal level at $65.00 and the clustered 100-period and 200-period SMAs between roughly $65.00 and $65.88; above these, $67.55 and $68.30 mark higher hurdles. On the downside, support is located at $60.90, ahead of a more critical floor at $60.00, where a stronger reaction would be needed to suggest a pause or partial reversal of the current bearish phase.

(The technical analysis of this story was written with the help of an AI tool. Know more.)