Silver Price Analysis: XAG/USD trades neutral after negative US Jobless Claims

The XAG/USD trades near the $24.20 level with mild losses.
Jobless Claims for the third week of December came in higher than expected.
US yields are mildly up, still near multi-month lows.
Markets anticipate a sizeable 160 basis point rate cuts for 2024.

In Thursday’s trading session, the Silver price (XAG/USD) trades neutral at about $24.20. That being said, the upside is open for the precious metal as dovish sentiment regarding the Federal Reserve’s monetary policy and weaker-than-expected US Jobless Claims data may pave the way for further upward movements.

Recognizing the inflation decelerating at the last 2023 meeting, the Federal Reserve gave assurances of no rate increases in 2024 while suggesting a 75 basis points reduction. This has led markets to anticipate a rate decrease in both March and May and the dovish market bets gained momentum following the release of soft Personal Consumption Expenditures (PCE) from November, the Fed’s favored inflation metric. As these figures provided additional proof of economic deceleration, they subsequently weakened the US Dollar and yields favoring the metal’s advance.

On Thursday, it was reported that the Jobless Claims for the week ending in December 22 rose to 218K, vs. the 210K expected and accelerated from the last 206K, which seems to be applying further pressure on the US Dollar.

That being said, the US bond yields are recovering but are still near multi-month lows. The 2-year rate stands at 4.27%, while the 5-year and 10-year yields are observed at 3.82% each. These upward movements may limit the upside during the session for the grey metal as US Treasury yields often represent their opportunity cost.

XAG/USD levels to watch

The indicators on the daily chart reflect a bullish bias, but there are some signs of buying exhaustion. The Relative Strength Index (RSI), flat and in positive territory, coupled with the green bars of the Moving Average Convergence Divergence (MACD) being flat, further emphasizes the inertia from the buyer’s side, which seems to be running out of steam.

Despite the short-term mixed outlook, the price remains above the 20,100,200-day Simple Moving Averages (SMAs), illuminating the stronghold of the bulls in larger time frames.

Support Levels: $24.00 (20-day SMA), $23.65 (200-day SMA), $23.50.
Resistance Levels: $24.40, $24.60, $24.80.