• XAG/USD stands with nearly 0.70% gains near $22.90 after reaching a daily high of $23.70.
• US Manufacturing PMI fell to 46 in June, a contraction worse than expected.
• Falling US Treasury yields gave room for the precious metal to rise.

Silver prices (XAG/USD) are rising, showing gains of approximately 0.70% and trading near $22.90, following a surge that led to a daily high of $23.70. This upward momentum comes in response to the weak US Manufacturing Purchasing Managers' Index (PMI) for June, which recorded a contractionary figure of 46, falling short of expectations. The decline in US Treasury yields has allowed the precious metal to advance, although it is worth noting that yields are still in positive territory, which can limit the XAG/USD’s upside potential.

US reported weak Manufacturing PMI; yields hold its ground

The most recent release of the Institute for Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI) for June revealed a reading of 46, falling short of the expected 47.2 and the previous figure of 46.9.

Despite a broad retreat in US yields (which could be seen as the opportunity cost of holding Silver), the Federal Reserve's (Fed) hawkish expectations for June have remained firm. The CME FedWatch Tool indicates that a 25 basis points (bps) hike in the upcoming July 31 meeting is practically priced in, while the likelihood of another 25 bps hike in 2023 has increased to around 40%. Furthermore, market participants eagerly await the release of Non-Farm Payroll (NFP) data on Friday, as it will continue shaping expectations regarding the Fed's future decisions.

That being said, it's worth noticing that higher interest rates tend to weaken precious metal prices, so traders should be aware that hot NFP reading may trigger further downside for the XAG/USD