Silver (XAG/USD) is trading with caution near its four-week low at approximately $60.00 during the European session on Thursday, reflecting ongoing pressure from surging US Treasury yields [1]. The 10-year US Treasury yield has reached a fresh two-decade high near 5.3%, which has diminished the appeal of non-yielding assets like silver [1]. Despite traders reducing their expectations for a hawkish Federal Reserve stance at the upcoming October meeting, and the August Personal Consumption Expenditure (PCE) Price Index coming in lower than projected, silver remains under pressure [1].
According to the CME FedWatch tool, the probability of the Fed leaving interest rates unchanged at this month's policy meeting has increased to 62.4%, up from 29% a week ago, as traders have dialed back hawkish bets following comments from New York Fed Bank President John Williams, who stated there is no urgency for interest rate cuts [1]. However, analysts at TD Securities maintain that they still expect the Fed to raise rates in October, though they acknowledge the possibility of a more gradual approach. They note that the underlying trend is robust growth with rising inflation risks, which is expected to continue dominating the Fed's outlook [1]. TD Securities also described the latest US PCE and GDP revisions as a "mixed bag," with hawkish backward adjustments to growth and dovish adjustments to inflation [1].
Technically, XAG/USD is trading at $60.38, maintaining a bearish near-term tone as it remains well below the 20-period Exponential Moving Average (EMA) at $63.66. The Relative Strength Index (14) stands at 38.50, just above oversold territory, indicating persistent but not yet exhausted bearish momentum [1]. If silver fails to hold the $60.00 level, it could slide towards the August 4 low at $58.00. On the upside, resistance is seen at the August 19 low of $62.19 and the 20-period EMA at $63.66 [1].
Looking ahead, the next major movement in silver prices is expected to be driven by the US Nonfarm Payrolls (NFP) data for September, which will be published on Friday [1].
CONCLUSION
Silver prices are under significant pressure due to soaring US Treasury yields and shifting Federal Reserve expectations. Technical indicators suggest a bearish outlook, with further downside possible if the $60.00 support fails. The upcoming US Nonfarm Payrolls data is likely to be the next key catalyst for silver's direction.