- The white metal remains downward biased but appears to have found a base around $19.00.
- Safe-haven flows toward the greenback, and US Treasuries keep the precious metals complex under pressure.
- The US 2s-10s yield curve is still inverted, flagging recession fears.
Silver (XAGUSD) is subdued during the North American session, seesawing for the fourth consecutive day in a narrow $19.13-37 area. The white metal remains downward biased, pressured by a buoyant greenback, higher US Treasury yields, and risk aversion on investors’ uncertainty about the economic outlook.
The XAGUSD is trading at $19.19, near the daily pivot point around $19.26, down 0.61%, while the US Dollar Index, a measure of the greenback’s value against a basket of peers, sits at 107.949, up 0.98%. US Treasury yields are down, led by the 10-year benchmark note rate at 2.991%, dropping ten bps, while the US 2s-10s yield curve stays inverted for the fifth consecutive day, at -0.052%.
A risk-off impulse and US dollar flows drag precious metals down
Risk aversion dominates Monday’s session as global equities drop. China’s covid resurgence, the release of US inflation figures, and recession fears keep the king dollar intact. Shanghai reported a new coronavirus variant, while Macau shut off its business and casinos at least for one week.
In the meantime, the US economic calendar featured Fed speakers. The Kansas City Fed President Esther George said, “moving interest rates too fast raises the prospect of oversteering.”. George, a dissenter in the last meeting, who opposed a 75 bps, said that she agreed about hiking rates faster to dampen inflation, though expressed concerns that it could harm the economy.
Later the St. Lous Fed President James Bullard reiterated that the US economy is solid and can handle higher rates while backing a 75 bps rate hike for the July meeting.
What to watch
The week ahead, the US economic docket will feature the US Consumer Price Index, Retail Sales, PPI, and the University of Michigan Consumer Sentiment.