Silver price prediction amid improved risk appetite

Silver price is trading within a rather tight range. It may remain range-bound in the short term.

Key drivers

On the one hand, silver price is feeling the pressure from the improving risk sentiment. This is as a result of the subsiding Omicron-related fears. Various governments have refrained from enacting additional coronavirus restrictions in the near term.

Investors have shifted their focus from a defensive positioning to the global recovery trade. For instance, Dow Jones is at November’s high at $36,488.64. However, the rising risk appetite has also offered some support to silver price as the US dollar trades close to its range’s lower border.

At the time of writing, the dollar index was up by 0.13% at $96.01. $95.86 has been a steady support zone for the greenback since the beginning of December.

Silver price’s pressure is further from the rising Treasury yields. Higher yields usually offer support to the US dollar while increasing the opportunity cost of holding non-yielding precious metals like silver and gold.

The benchmark 10-year US bond yields are currently at 1.54%. it has been on the rise for three consecutive sessions after hitting a low of 1.45%. the 30-year and 3-month yields are also up by 0.36% and 29.22% respectively. Based on both the fundamentals and technicals, the precious metal will likely trade within a rather tight range in the short term.   

Silver price prediction

Silver price is in the red after erasing the week’s gains. On Tuesday, the precious metal surged to its highest level in December at 23.44. However, it has since pulled back to the current 22.71.

On a four-hour chart, it is trading slightly below the 25 and 50-day exponential moving averages. It is also below the long-term 200-day EMA. Based on these technical indicators, the metal will likely remain under pressure in the short term.

In the ensuing sessions, the psychologically crucial level of 23 will remain a key resistance zone. In particular, silver price may find resistance along the 200-day EMA at 22.96. Subsequently, it may trade within a tight range with 22.59 as the support level.

Additional bullish momentum may give the bulls an opportunity to retest the upper target at 23.31. on the flip side, a further decline will likely place the support level at 22.31.