Real yield is nominal yield minus inflation expectations. For example, let’s say that you view the aggressive Fed as The International Handbook of Shipping Finance a headwind for XAG/USD. So, you will want to mainly take short positions.

XAG to USD Chart

Precious metals “compete” with another risk-free asset, the US Treasury Bond. But while Silver doesn’t pay an interest to own (it actually has costs to store it), the US Treasury Bond pays an interest called yield. So, the opportunity cost of holding one of the two is given by the real yield.

1. XAG/USD is basically a play on the expectation of where US real yields will go in the next 6/12 months.
2. As long as they stay the course, inflation expectations should remain anchored and even trend down, but as nominal yields rise due to the Fed tightening, real yields of course will keep on rising.
3. When real yields are expected to rise you will generally see XAG/USD going down and when real yields are expected to fall you will see XAG/USD rise.
4. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.
5. Inflation is at 40 years high but Silver and Gold just kept on depreciating.
6. The market realised that inflation was already really high, and this war would have increased inflationary pressures on food and energy, making the market to expect even more rate hikes on the horizon.

So, when the price is going up, Silver is said to be appreciating or getting stronger and vice versa when the price is going down. Check live rates, send money securely, set rate alerts, receive notifications and more. Create a chart for any currency pair in the world to see their currency history. These currency charts use live mid-market rates, are easy to use, and are very reliable.

About Silver / U.S. Dollar

These expectations come from various macro fundamentals but the most important one is the US Federal Reserve monetary policy. When the Fed begins a tightening cycle raising interest rates, real yields rise and XAG/USD falls. When the Fed begins a cutting cycle slashing interest rate, real yields fall, and XAG/USD rises.

A common misconception is that Silver or Gold are inflation hedges, so when inflation is high the precious metals appreciate and when inflation is low the https://forexanalytics.info/ precious metals depreciate. It’s been demonstrated many times that this relationship is wrong, but if someone wants a great example, you can just look at what happened this year. Inflation is at 40 years high but Silver and Gold just kept on depreciating. In fact, what is important for XAG/USD is not actual inflation but expected inflation. This expected inflation can be seen through US real yields. When the Fed is tightening monetary policy, you can expect nominal yields to rise and inflation expectations to fall because tighter monetary conditions are disinflationary/deflationary.

XAG/USD Chart

You can look at Silver or Gold as pretty much the reflection of the expectations of future US real yields. Note though that the market is always forward looking, so the trends will remain intact unless the fundamentals will start to change and indicate a possible turning point in the Fed’s actions. The other important inverse correlation you should know about is the one with US real yields.

We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. This information is made available for informational purposes only. It is not a solicitation or a recommendation to trade derivatives contracts or securities and should not be construed or interpreted as financial advice. Any examples given are provided for illustrative purposes only and no representation is being made that any person will, or is likely to, achieve profits or losses similar to those examples. DailyFX Limited is not responsible for any trading decisions taken by persons not intended to view this material. XAG/USD pair is important for those wishing to capitalise on the actions of the Federal Reserve as the monetary policy course that the central bank will take will dictate the returns of Silver.

You can also find Silver traded with other currencies like XAG/EUR or XAG/GBP. This exchange rate tells you how many US Dollars you need to buy one troy ounce of Silver. For example, if XAG/USD is trading at 18.70, it means that you need 18.70 US Dollars to buy one troy ounce of Silver.

Below you can see the chart showing the inverse relationship between US real yields and silver price. When Russia invaded Ukraine the first reaction in the markets was a flight to safety. That reaction soon revealed to be wrong footed. The market realised that inflation was already really high, and this war would have increased inflationary pressures on food and energy, making the market to expect even more rate hikes on the horizon.

So, you open the XAG/USD chart and use technical concepts like support and resistance, trendlines, Fibonacci ratios, indicators and so on to decide where to open a trade. For example, in the chart below you can see how you could use the downward trendline with a previous swing level as resistance for extra confluence. You could place a stop loss above that strong area, so your loss would be little and limited. Your target could have been much more than that. This way you can risk a little to make more than a little. XAG/USD is the exchange rate that shows the value of Silver against the US Dollar.

Where can you enter in order to have a small risk exposure but a bigger profit potential? What is less known is that they “compete” with another risk-free asset, which is the US Treasury Bond. Unlike precious metals though the US Treasury Bond also pays an interest. The opportunity cost of holding a precious metal or a US Treasury Bond is given by the Real Yield. When real yields are expected to rise you will generally see XAG/USD going down and when real yields are expected to fall you will see XAG/USD rise.

What is XAG/USD?

Always choose a good, reputable, and regulated broker to avoid unnecessary problems. When you open a trading account with a broker, you will have to supply your KYC documents and, once approved, deposit money to be able to trade. Finally, you can use the broker trading platform to execute your trades. Most retail brokers let you also trade on MetaTrader 4 or MetaTrader 5, which are two of the most famous and popular trading platforms among retail traders. Most retail brokers offer CFD trading, although you can also trade XAG/USD via other derivatives like futures or options that trade on exchanges but are more expensive than CFDs. Moreover, you can invest in Silver via ETFs (Exchange Traded Fund) like for example the iShares Silver Trust (SLV).

So, we may expect sometime in Q2 or Q3 inflation to coming back to the central bank target of 2% as growth is already slowing down and will slow down even more going forward. Once the market will see the Fed to cut interest rates to spur growth, XAG/USD should begin a new uptrend. Our currency rankings show that the most popular Silver Ounce exchange rate is the XAG to USD rate. Below, you’ll find Silver Ounce rates and a currency converter.

So, you will expect less inflation going forward. Remember that the market is forward looking, it prices in future expectations not what is happening in the present. So, precious metals have an inverse correlation to US real yields.