Silver Price Analysis: XAG/USD plunges to near $22.50 as USD strengthens after encouraging US data

  • Silver price falls vertically to around $22.40 following upbeat US durable goods orders data.
  • Fed Chairman Kashkari said raising rates further seems justified and that it is necessary to keep them high to cool the situation.
  • The Dollar Index extends its bullish run and prints a new 11-month high at 106.60.

The price of the Silver (XAG/USD) fell to around $22.45 early in the New York session following the release of encouraging August durable goods orders data. The economic data rose a surprising 0.2% compared to expectations of a 0.5% decline. In July, orders suffered a sharp contraction of 5.6%, at a difficult time for the US manufacturing sector.

The surprising increase in orders for basic goods indicates that demand prospects are improving and that companies are coming to terms with fears of an interest rate hike by the Federal Reserve (Fed). The US manufacturing PMI has a long period of steady declines, and a surprise increase in orders for basic goods could improve factory activity, making the US economy more resilient.

For his part, Minneapolis Fed President Neel Kashkari said there is a risk that interest rates will have to rise, but added that it is difficult to know. Earlier, Fed Governor Kashkari commented that the economy is fundamentally much stronger than anticipated. Therefore, raising rates further seems justified and they need to stay high to cool things down.

The US Dollar Index (DXY) extends its bullish journey and prints a new 11-month high at 106.60 points. US 10-year Treasury yields recovered to near 4.54%.

Silver technical analysis

Silver extends its decline near the support zone drawn in a tight range of $22.24 – $22.30 on a two-hour scale. The downward slope of the 20-period EMA at $22.87 indicates that the short-term trend is bearish.

The Relative Strength Index (RSI) (14) is moving towards the bearish range of 20.00-40.00, justifying further declines.

Silver Two-Hour Chart

XAG/USD

Overview
Latest price today 22.5
Today Daily variation -0.36
Today’s daily variation -1.57
Today’s daily opening 22.86
Trends
daily SMA20 23.36
daily SMA50 23.59
SMA100 daily 23.57
SMA200 daily 23.47
Levels
Previous daily high 23.14
Previous daily low 22.85
Previous weekly high 23.78
Previous weekly low 22.81
Previous Monthly High 25.02
Previous monthly low 22.23
Daily Fibonacci 38.2 22.96
Fibonacci 61.8% daily 23.03
Daily Pivot Point S1 22.76
Daily Pivot Point S2 22.66
Daily Pivot Point S3 22.47
Daily Pivot Point R1 23.05
Daily Pivot Point R2 23.24
Daily Pivot Point R3 23.34

Source: Fx Street

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