XAG / USD crashes nearly 2% amid risk-free market sentiment

• XAG / USD falls upon the discovery of a new variant of COVD-19 in South Africa.
• The risk-free market sentiment, spurred on by the COVID-19 NU variant, triggered a sell-off in the precious metals segment.

Silver (XAG / USD) extended its losses overnight, plunging 1.91% on the day and trading at $ 23.14 during the New York session at the time of writing. The discovery of a new variant of COVID-19 called NU in South Africa has dampened market sentiment.

South Africa discovered a new variant of COVID-19 that dampened market sentiment

The global scientific community is on high alert, according to the wire. There is a possibility that the new COVID-19 variant “NU” discovered in South Africa could be more virulent than the Delta and more vaccine-resistant. Scientists said it has many mutations on the spike protein and it is the “most advanced” variant of the original virus discovered to date.

In the night session, XAG / USD hit a daily high of $ 23.70. Once the levels were reached, however, the COVD-19 news crossing the wires sparked a $ 0.40 drop that found some episodes over the course of the European and North American sessions. Silver broke below $ 23.00 in the past few hours but rebounded from Friday’s low of $ 22.87 to hit $ 23.00 at the time of writing.

Meanwhile, the US dollar index, which tracks the performance of the greenback against a basket of six competitors, fell 0.60% to stand at 96.15, supported by falling US T-bond yields, while the 10th -year benchmark bond slips 14 basis points, down to 1.50%.

Therefore, the developments of COVID-19 would be the main drivers for silver and commodity traders. It’s worth noting that gold is trading at heavy losses, tumbling $ 15.00 on the day to stand at $ 1,785 at press time. Additionally, Western Texas Intermediate (WTI), the US crude oil benchmark, is down 11.63% to trade at $ 68.91.

XAG / USD Price Prediction: Technical Outlook

Silver (XAG / USD) has a bearish trend as illustrated by the daily moving averages (DMAs) which are above the spot price. That, along with the Relative Strength Index (RSI) at 36, suggests that the non-yielding metal still has room to push another leg down.

As a result of extending the downtrend, the first demand zone would be the value of $ 23.00. A break in the latter would reveal key support levels such as the October 12th swing low at $ 22.34, followed by the psychological $ 22.00.