• Silver price extends its weekly rally after bottoming around $18.00.
• XAGUSD soars on falling US Treasury yields which undermine the greenback.
• The US economy taps into recessionary territory as GDP shrank by 0.9%.

Silver price rallied for three consecutive days, gaining almost 9% in the week courtesy of traders’ upbeat mood, on the perception of a Fed “dovish” tilt, spurring lower US treasury yields and weakening the US dollar. Alongside the previously mentioned, a dismal US GDP reading for the second quarter decreased bets that the US Federal Reserve would keep tightening at its current pace as the stagflationary scenario worsens. At the time of writing, XAGUSD is trading at $19.91.

XAGUSD soars on falling US Treasury yields which undermine the greenback

US equity futures rise on the back of positive US corporate earnings. In the meantime, falling US Treasury yields, led by the 10-year note rate slashing 12 bps, yielding just 2.671%, bolstered the appetite for the white metal.

On Thursday, the US Department of Commerce revealed that US GDP for Q2 shrank at a 0.9% YoY pace after declining 1.6% in the first quarter, meaning that the US is in a technical recession. At the same time, the US Department of Labor reported that Initial Jobless Claims for the week ending on July 23 rose by 256K, higher than forecasts but lower than the previous week’s 261K.

During the day, the greenback weakened, undermined by falling US bond yields. The US Dollar Index is losing 0.24% and sits at 106.206 after hitting a daily high at 106.975.

On Wednesday, the Federal Reserve hiked 75 bps the Federal funds rate (FFR). In the monetary policy statement, the Fed acknowledged that the economy is slowing, but it also emphasized its commitment to bringing inflation down to its 2% target. Nevertheless, money market futures pared back further rate hikes by the Fed, as they are pricing in less than 100 bps of tightening, foreseeing the FFR to finish around 3.25%.

Also read: Gold Price Forecast: XAUUSD conquers $1,750 as US Q2 GDP shrinks, flashing a recession

What to watch

The US economic docket will feature the Personal Consumption Expenditures (PCE) on its headline and core readings. Later, the University of Michigan (UoM) Consumer Sentiment for July’s final reading will be revealed.

Silver (XAGUSD) Key Technical Levels