FX.co ★ XAG/USD, SILVER

XAG/USD traded sideways on Friday and broke out above $64.00. The metal is looking at a possible 3.7% weekly decline and is aiming for the bottom of its monthly trading range at $62.30 amid bearish eyes on the level. Precious metals have had a tough week as US Treasury yields have risen across the curve while Fed officials have hinted at more interest rate hikes in the coming months. Strong US economic activity, rising inflation pressures from higher crude oil prices, and fears of increased US government debt have pushed US Treasury yields to multi-year highs. In addition, federal policymakers signaled this week, in line with market expectations, further interest rate increases in the coming months. This morning, Philadelphia Fed President Anna H. Paulson said small interest rate changes are needed to move inflation closer to the target level. Only a few hours before, New York Fed President John Williams said that there were solid reasons to expect further interest rate increases this year. XAG/USD continues to trade near $64.97 and still demonstrates a bearish bias on an immediate horizon. It holds a position near the lower limit of the monthly trading channel, ranging around $62.20–$62.30. Momentum indicators on the daily timeframe confirm the bearish scenario, as the Relative Strength Index (14) trades in a neutral-to-bearish range and MACD holds negative readings. If price falls through the critical level of $62.20–$62.30, marked by the lows of August 10 and September 16, respectively, it will form a bearish head and shoulders (H&S) pattern. This event may accelerate bearish momentum, driving price down toward $60.87 (August 6 low) and further toward the August 5 low near $59.35. Resistance comes in on the higher end of the chart at 65.30, the September 22 low. This level sits just below the upper range border and slightly above 68.00. This level has blocked further upward movement since earlier in the month.