Slight Bearish Bias Expected on XAGUSD in 17/10/2024XAGUSD: Slight Bearish Bias Expected on 17/10/2024 – Key Drivers Analysis
As we head into today’s session on 17/10/2024, the XAGUSD (Silver to US Dollar) pair is showing signs of a slightly bearish bias. A combination of fundamental and technical factors suggests that silver may face some downward pressure throughout the trading day. Below, we’ll explore the key drivers influencing the bearish sentiment and what traders should watch for in the XAGUSD market.
1. Rising US Dollar Strength
A major factor contributing to the bearish bias in XAGUSD is the continued strength of the US Dollar (USD). The US Dollar Index (DXY) has been climbing as investors increasingly expect the US Federal Reserve to keep interest rates elevated for a prolonged period. Recent US economic data, including strong retail sales figures and better-than-expected inflation numbers, have supported the Fed’s hawkish stance.
As the USD strengthens, the price of silver, which is priced in US dollars, tends to fall since it becomes more expensive for foreign investors to purchase the metal. This negative correlation between the USD and silver prices is a key driver for today’s expected bearish bias in XAGUSD.
2. Decreased Demand for Safe-Haven Assets
Silver, much like gold, is often viewed as a safe-haven asset. However, as market sentiment improves and investors regain their risk appetite, the demand for silver as a safe-haven diminishes. Despite lingering geopolitical tensions, the broader market is displaying signs of optimism, with equity markets stabilizing and risk-on assets performing better in recent days.
This shift in sentiment away from safe-haven assets is another factor that could weigh on silver prices today. Investors are opting for higher-yielding investments, reducing the demand for silver and thus exerting downward pressure on XAGUSD.
3. Rising US Bond Yields
Another key factor influencing the slight bearish bias in XAGUSD today is the ongoing rise in US Treasury yields. Higher bond yields increase the opportunity cost of holding non-yielding assets like silver. As yields on US government bonds climb, silver becomes less attractive to investors seeking returns, further contributing to the selling pressure on the metal.
The recent spike in yields, particularly in the 10-year Treasury note, has been driven by expectations of prolonged high-interest rates in the US. This creates a negative environment for silver, which traditionally benefits in low-interest-rate conditions.
4. Technical Factors
From a technical analysis perspective, the XAGUSD pair has struggled to break through key resistance levels around $22.50 in recent sessions. This level has been tested multiple times but failed to be breached, indicating strong resistance. The failure to break this resistance signals weakness in the market, aligning with the bearish sentiment for today.
In addition, the Relative Strength Index (RSI) is showing signs of bearish divergence, suggesting that the momentum behind silver's recent recovery might be fading. If the price moves below the key support level around $21.80, we could see further downside movement toward $21.50.
5. Slowing Global Industrial Demand
While silver has significant industrial applications, the global economic outlook has dimmed, especially in major economies like China and Germany. China’s sluggish growth and lower-than-expected demand from its manufacturing sector are weighing on the global demand for silver, contributing to the bearish outlook for today. A slowdown in industrial demand typically reduces the price of silver, as it is a key component in electronics, solar panels, and various industrial applications.
Conclusion: Slight Bearish Bias for XAGUSD on 17/10/2024
In conclusion, the XAGUSD pair is likely to exhibit a slightly bearish bias throughout today’s session due to a combination of a stronger US Dollar, rising US bond yields, decreased safe-haven demand, and technical resistance levels. Additionally, slowing global industrial demand for silver, particularly from China, adds to the bearish outlook.
Traders should keep an eye on key support levels around $21.80, as a break below this level could lead to further downside. Conversely, any signs of renewed risk-off sentiment or unexpected weakness in the USD could provide some relief for silver bulls.
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