Silver continues to trade well within the recent ranges, as traders keep an eye on geopolitical developments.

Strong end to a strong week in US and global equities saw safe-haven Silver fall under selling pressure on Friday. This despite the fact long-term US yields being lower and the curve flashing recession warnings. Spot silver (XAG/USD), which dropped from $25.40s at current levels to $24.90 at the end of the week, was down almost 2.0%. This means that the precious metal is back south of its 21 Day Moving Average.

While geopolitics is still the main driving force of the market, traders/market participants are evaluating the possibility of a Russo/Ukraine peace agreement. This week, the Fed has been a major talking point. On Friday, Fed policymakers were in full force. Christopher Waller and James Bullard backed an aggressive hike cycle that would see rates rise well above “neutral” by the year’s end. Other Fed speakers took a slightly more measured approach.

Bullard’s and Waller’s hawkish comments seemed to increase the implied probability that the Fed will raise interest rates by 50bps at its next meeting. This could have had an impact on precious metals such as silver, which are sensitive to the Fed’s actions. The 2-year US yields rose 4bps to 1.95%, and the Fed is now eyeing a test at 2.0%. This would be in contrast to previous multi-year weekly highs of 2.0%. By increasing the perceived opportunity cost of holding non-yielding precious materials, higher yields could reduce demand.

As noted, the US curve is showing signs of recession. The spread of the 2s10s spread fell to below 20bps on Friday as a result. The 2s10s spread turning negative is historically a reliable indicator for an upcoming recession within the next year. Fears about this could encourage safe-haven demand which could eventually benefit silver.

Technically speaking, Friday’s spot silver price action has not been very significant. Currently, the XAG/USD is near the $24.90 mark. This is close to the middle of the $24.50-$25.50ish range which has been in place over the last few days. If broad risk appetite continues to improve next week, a bearish break could open the doors to a run towards 50 and 200DMAs which both sit close to $24.00.