Silver Price Analysis: XAG/USD declines toward $22 as Fed pushes back aggressive rate-cut hopes

• Silver price falls further as hopes of aggressive rate cuts from the Fed wanes.
• US economic resilience has trimmed the Fed's early rate-cut hopes.
• Silver price has been exposed to $22 due to a bearish outlook.

Silver price (XAG/USD) continues its two-day losing spell and is declining towards the crucial support of $22.00 in the European session on Tuesday. The white metal has been hit hard as bets supporting aggressive rate cuts by the Federal Reserve (Fed) have trimmed significantly due to robust economic performance in the United States.

S&P500 futures have surrendered most gains generated in the Asian session, portraying a decline in the risk appetite of the market participants. The US Dollar Index (DXY) rebounds strongly towards 104.60 as investors rush back to safe-haven assets amid expectations that rate cuts from the Fed will delay what market participants have forecasted. While the US dollar recovered sharply, the 10-year US Treasury yields dropped to nearly 4.14%.

The hopes of premature rate cuts by the Fed have faded significantly as policymakers believe that a rush towards early rate cuts could lead to a surge in the aggregate demand, which could prompt price pressures.

This week, the US economic calendar will remain light. Therefore, investors will focus on the commentary from Chicago Federal Reserve Bank President Loretta Mester for fresh guidance on interest rates.

Silver technical analysis

Silver price is declining towards the horizontal support of $21.88, plotted from November 13 low on a daily timeframe. The longer-term outlook of the Silver price is bearish as it is trading below the 200-period Exponential Moving Average (EMA), which trades around $23.20.

The 14-period Relative Strength Index (RSI) has shifted into the 20.00-60.00 range from the bullish range of 40.00-80.00, which indicates a bearish momentum has been triggered.

Silver daily chart