XAG/USD slips to near $29.40 as yields rise after upbeat US PMI flash

• Silver prices fall to near $29.40, weighed down by higher yields.
• Better-than-projected US flash PMI on rising August bond yields and US dollar.
• Next, investors will focus on Fed Powell’s speech at the JH Symposium.

The price of silver (XAG/USD) is falling sharply to near $29.40 in the North American session on Thursday. The white metal weakens as the US dollar (USD) recovers and bond yields rise after better-than-expected S&P Global PMI data for August in the United States (US).

The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, is back to near 101.45 from a more than seven-month low of 101.00. US 10-year Treasury yields rose to nearly 3.86%. Higher yields on interest-bearing assets weigh on non-yielding assets such as silver, as they increase the opportunity cost of holding an investment in them.

The flash PMI report showed that the composite PMI expanded at a faster-than-expected pace to 54.1, but remained below July’s 54.3 reading due to upbeat demand in the services sector. While the manufacturing PMI fell sharply to 48.0. Economists had already expected manufacturing activity to contract, but at a steady pace to 49.6.

Meanwhile, investors await Federal Reserve (Fed) Chairman Jerome Powell’s speech at the Jackson Hole (JH) Symposium, which starts at 14:00 GMT and runs through Saturday, Friday, for more clues on how deep will reduce interest rates. be in September and until the end of the year.

The CME FedWatch tool shows that the probability of a 50 basis point (bps) interest rate cut is 26.5%. while it remains pointing to a drop in key lending rates by a quarter to a point, signaling traders are confident the Fed will move to normalize policy in September.

Silver Technical Analysis

The price of silver is turning sideways after a decisive break above the August 2 high of $29.20, which shook the low, high, low formation in a four-hour span. The 20-period exponential moving average (EMA) near $29.20 is acting as a cushion for silver price bulls.

A bull crossover, represented by the 50- and 200-day EMAs near $28.50, suggests that the overall trend has turned strongly bullish.

The 14-period Relative Strength Index (RSI) is falling to near 60.00, suggesting that the bullish momentum is over for now. However, the uptrend remains intact.

Silver Four Hour Chart