Silver Price Forecast – Silver prices edged lower on more aggressive Fed rate hikes


key ideas

  • Silver prices have fallen.
  • Treasury yields traded flat for the second consecutive trading session.
  • Oil prices are soaring amid falling inventories and the prospect of an EU ban on Russian oil.

Silver prices declined despite the deterioration in economic activity. Gold prices fell as Fed minutes showed further rate hikes of 50 basis points at June and July meetings. The dollar is holding near a one-month low on slowing economic growth.

Benchmark yields were little changed today in the wake of major economic data. The ten-year yield fell slightly as investors continued to digest the latest news.

Oil prices maintain their upward momentum as the prospect of an EU ban on Russian oil becomes more likely as they strike a deal. There was also a larger than expected drop in crude oil inventories in the United States last week, which pushed prices higher.

First-quarter GDP fell 1.5%, worse than the expected drop of 1.3%. The decline in GDP is the worst it has been since the second quarter of 2020, which was at the height of the pandemic. The GDP reading points to a stronger economic downturn than economists expected.

Private inventories and residential investment were revised down, which offset the 3.1% rise in consumer spending. Economists expect the reading to improve in the second quarter as geopolitical tensions and the omicron variant weigh on economic activity.

Unemployment claims fell 8,000 to 210,000 from 218,000 the previous week.

Technical analysis

Silver prices are testing the 10-day moving average of 21.7, falling back near its weekly low before bouncing back and hovering just below the $22 level. XAG/USD maintains a bearish outlook for investors as Fed minutes point to aggressive rate hikes, underpinning a stronger dollar.

When silver prices break below support, they will maintain a downward trajectory to the $20.4 level, which was hit on May 13.

Support is near the 10-day moving average of $21.607. Resistance is seen near the May 6 highs at 22.6. The short-term momentum is positive as the Fast Stochastic had a crossover buy signal.

The medium-term momentum turns positive when the histogram prints positively with the MACD (Moving Average Convergence Divergence). The trajectory of the MACD The histogram is in positive territory, reflecting an upward trend in price movement.

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