• Silver prices are on the defensive, on broad US dollar strength.
• The US housing market crumbles as the Fed continues hiking rates aggressively.
• Silver Price Forecast (XAGUSD): Range-bound but tilted to the downside.

Silver price remains subdued, registering minimal losses late during the New York session. Factors like improved market sentiment, a buoyant US dollar, and elevated US Treasury yields keep the while metal pressured. At the time of writing, XAGUSD is trading at $18.65, down 0.19%.

The US Dollar Index, a measure of the buck’s value against six currencies, snaps three days of losses, rising 0.36% above the 107.000 threshold. US Treasuries remain under selling pressure, as the US 10-year benchmark note rate sits at 3.038%, almost flat, putting a lid on higher silver prices.

US housing data flash a faster economic deceleration

The US housing market is beginning to show flashes of further deterioration, as data reported during the week missed expectations, meaning a recession looms. On Tuesday, Housing Starts contracted to its lowest level since September 2021, declining 2% in June, while Building Permits, also known as building applications, shrank 0.6%, respectively.

In the meantime, Existing Home Sales for June, unveiled on Wednesday, followed suit Tuesday’s data, plunging to -5.4%, well below the 5.4% growth estimations. Sources cited by Bloomberg said that “both mortgage rates and home prices have risen too sharply in a short span of time.”

That said, the first signs of an impending US recession lie ahead. The US 2s-10s yield curve remains inverted for twelve straight days, at -0.220%, indicating investors’ worries of further economic deterioration. However, elevated inflationary pressures, with the US CPI above 9% and PPI at 11%, might not deter the Federal Reserve from hiking 75 bps in the next week.

Therefore, XAGUSD will remain on the defensive due to the greenback’s strength, which would also keep the commodity complex under pressure.  

What to watch

The US economic docket will feature the Philly Fed Manufacturing Index, Initial Jobless Claims, and the CB Leading Index.

Silver Price Forecast (XAGUSD): Technical outlook

Silver has been exchanging hands in low volatility conditions during the last three days, as shown by the dismal $0.10 trading range, trapped within the $18.60-70 area. Furthermore, the XAGUSD 1-hour moving averages (HMAs) hoover around that area, further explaining the narrow trading range.

To the upside, the XAGUSD’s first resistance would be July’s 18 high at 19.01. Break above will expose the July 13 daily high at 19.40. Conversely, XAGUSD’s first support would be the S1 daily pivot at $18.59. A breach of the latter will expose the July 15 daily low at $18.17.