Silver gives back some gains as US yields rebound

• Silver consolidates part of Wednesday’s gains and trades around $66.70, down 0.44% on Thursday.
• The US Treasury’s plan to double bond buybacks triggered a sharp decline in long-term yields on Wednesday, supporting precious metals.
• US Treasury yields recover slightly on Thursday, while hawkish Federal Reserve Minutes also limit Silver’s upside.

Silver (XAG/USD) declines 0.44% on Thursday and trades around $66.70 at the time of writing, giving back part of Wednesday’s gains. The white metal remains elevated by the sharp decline in US Treasury yields seen in the previous day, although a modest rebound in yields on Thursday is limiting further upside.

The US Treasury announced on Wednesday that it plans to at least double the maximum size of its liquidity-support buyback operations for longer-dated nominal securities starting in September. The decision comes as rising US borrowing costs have recently put significant pressure on the bond market.

The announcement triggered a sharp decline in long-term US Treasury yields on Wednesday, providing a boost to Silver and precious metals more broadly. However, yields recover some ground on Thursday, with the 30-year US Treasury yield rising back toward 5.23% and the 10-year yield hovering around 4.69%. The modest rebound in yields helps explain why Silver struggles to extend Wednesday’s advance.

The broader decline in yields from recent highs also weighs on the US Dollar (USD). The US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, remains close to a seven-week low on Thursday. Lower yields and a softer US Dollar generally support Silver, as they reduce the opportunity cost of holding the non-yielding metal and make USD-denominated commodities more attractive to buyers using other currencies.

However, the Treasury’s intervention does not remove concerns surrounding US public finances. US national debt surpassed $40 trillion on Tuesday, while investors have been demanding higher compensation to hold longer-dated government bonds. According to ING, the Treasury’s increase in buybacks does little to address the underlying factors pushing yields higher, including large fiscal deficits and elevated inflation expectations.

Silver also faces a headwind from the monetary policy outlook. The Minutes of the July Federal Open Market Committee (FOMC) meeting show that many officials believe an interest rate hike could become necessary if progress in bringing inflation down remains insufficient. Persistently high interest rates would generally weigh on non-yielding assets such as Silver.

Investors now turn their attention to upcoming US data, including the Philadelphia Federal Reserve (Fed) Manufacturing Index and Initial Jobless Claims, as well as comments from Fed officials. The releases could provide fresh direction to US Treasury yields and the US Dollar and, in turn, influence Silver’s next move.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $66.78, maintaining a bullish near-term bias as price holds above both the 100-period simple moving average (SMA) at $65.21 and the 200-period SMA at $65.08. The pair is also supported by a nearby horizontal level at $66.50, while the Relative Strength Index (RSI) at 62.04 stays comfortably above neutral, hinting at sustained positive momentum after the latest advance.

On the topside, initial resistance emerges at $67.33, ahead of a higher barrier at $68.00, where bullish attempts could face profit-taking. On the downside, immediate support is seen at $66.50, with deeper demand clustered around the 100-period SMA at $65.21 and the horizontal floor at $65.10, while the 200-period SMA at $65.08 underpins the broader constructive tone as long as it remains intact.

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