XAG / USD struggles to defend $ 22.00 as the market waits for the Fed

• Silver fades bounce off 10-week lows amid cautious sentiment.
• The US KPI sparked a rally, but Fed fears and Omicron worries are putting commodity buyers to the test.
• Risk catalysts stay in the driver’s seat on a bright calendar day, according to the Fed’s ruling.

Silver (XAG / USD) is down from an intraday high of $ 22.25, meaning the rebound from late September levels could not be extended.

The bright metal broke a two-day downtrend to rebound from its multi-day low the previous day amid broad US dollar weakness. However, market concerns ahead of the week’s most important central bank decisions weighed on the price. Another challenge for raw material prices could be the new fears about the South African variant of Covid, known as Omicron, as well as the dispute between the US and China over Taiwan and the phase 1 deal.

Global markets remained positive on Friday despite the consumer price index (CPI) hitting a new 39-year high. The reason could be the inflation meter’s agreement with the broad consensus that rejected fears of abnormally high price pressures as forecast. However, the US CPI for November was in line with expectations of 6.8% yoy, versus 6.2% a year earlier. In addition, stable inflation expectations, according to the University of Michigan’s Consumer Sentiment Index at 70.4 for December, added to the upward momentum in XAG / USD prices.

While US inflation data sparked market optimism, the return of Fed rate hike worries appears to weigh on supply as of press time. Even so, the S&P 500 futures are up 0.18% over the course of the day while tracking the Wall Street benchmark’s rise to the new all-time level.

It is worth noting that 10-year US Treasury bond yields have lagged 1.50% and therefore market participants are waiting for further clues to continue the recent rebound in silver prices.

In the absence of key data / events to be released on Monday, Covid updates and risk catalysts are vital in keeping an eye out for fresh momentum.

Technical analysis

The 10-DMA level around $ 22.35 challenges silver’s corrective pullback from the recent multi-day low of $ 21.82. However, a clear upside break in the fourteen day old descending trendline leaves XAG / USD buyers hopeful.