Silver Price Forecast: XAG/USD hovers near two-year high around $28 despite higher bond yields

• Silver price exhibits strength around $28 despite traders pare Fed rate cut bets for June.
• Fed Bowman said current conditions are not appropriate for lowering borrowing rates.
• The US Dollar awaits the US inflation data for fresh guidance.

Silver price (XAG/USD) faces a nominal sell-off after printing a fresh two-year high around $28.00 in Monday’s early New York session. The near-term demand for the white metal remains strong even though US Treasury yields soar after upbeat United States Nonfarm Payrolls (NFP) data for March dent speculation for the Federal Reserve (Fed) lowering borrowing rates from the June meeting. 10-year US Treasury yields rise to 4.43%.

Strong labor demand is offset by higher wage offerings, which leads to robust consumer spending that fuels consumer price inflation. After the US NFP release, Fed Governor Michelle Bowman said, “We are still not yet at the point where it is appropriate to lower the policy rate, and I continue to see a number of upside risks to inflation.”

Fed policymakers have been reiterating that there is no urgency for rate cuts. Policymakers need good inflation data for months before pivoting to rate cuts.

The US Dollar Index (DXY) falls slightly to 104.24 but remains inside Friday’s trading range. The USD index stays on the sidelines as the focus shifts to the consumer price inflation data for March, which will be published on Wednesday.

The core CPI that strips off volatile food and Oil prices is estimated to have dipped slightly to 3.7% from 3.8%. A more-than-anticipated decline in the US inflation data will prompt Fed rate cut expectations for the June meeting.

Silver technical analysis

Silver price sees a sharp upside after a breakout of the Ascending Triangle pattern formed on daily timeframe. The aforementioned chart pattern exhibits sharp volatility contraction but a decisive breakout leads to heavy volume and wider ticks on the upside. The horizontal resistance of the above-mentioned chart pattern, placed from May 5 high at $26.13, has turned into a crucial support for the Silver price bulls.

Advancing 20-day Exponential Moving Average (EMA) near $25.50 keeps the near-term demand strong.

The 14-period Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, indicating a strong momentum leaned to the upside.

Silver daily chart