Silver in the hands of US dollar bulls

• XAG/USD bears are taking charge as the US dollar remains firm.
• Fed hawkishness is driving the US dollar and yields higher, weighing on precious metals.

Silver fell hard overnight to a low of $22.10 from a high of $24.37 as the greenback continued to gain on the recovery in US yields. 

The Nonfarm Payrolls outcome has proven to be a sustainable demand driven feature in markets for the US dollar which has risen sharply up to test the psychological 93 figure at the start of this week.

Long-end rates rose, with the US 10-year yield rising 2.2bps, to 1.319% taking the DXY index higher by over 0.2%  to score a high of 92.989. 

Long-end rates were rising on the back of comments from Atlanta Fed President Bostic, who argued that if data comes out this strong “for the next month or two” then “substantial progress” would have been made on the Fed’s goals. Bostic also noted that robust market functioning meant a relatively rapid taper of asset purchases could be achieved.

''Inflation data scheduled for release on Wednesday take on added importance amid the bearish tone in the market. Any signs of sustained price rise could put further pressure on gold as expectations of a more hawkish Fed strengthen,'' analysts at ANZ Bank said.

Silver technical analysis

Technically, from a 4-hour perspective, having tested the 50% mean reversion level at near 24.05 already, XAG/USD is making its way lower again for the session ahead.

The spike lows of 22.10 are in focus.

If bulls manage to get back above the 50% mean reversion level, then there will be prospects of a deeper correction to the forefront.

Bulls will look to the 27 July lows and the confluence with the 61.8% Fibonacci Retracement level will be eyed near 24.50.