Silver Price Prediction – Price Drop Following Fed Decision


Silver prices fell as yields fell as the Fed maintained an accommodative stance. While benchmark interest rates remain unchanged, the Fed has announced its intention to reduce the volume of bonds it purchases each month, thereby reducing its quantitative easing. The Fed also said the economy has grown, but travel and leisure are limited due to the pandemic. The Fed also mentioned supply chain disruptions that led to high levels of inflation. The Fed expects stronger growth in the future as more vaccines are rolled out and the number of COVID cases declines.

Technical analysis

Silver prices fell sharply falling below support which is now resistance near the 50 day moving average at 23.38. Short-term momentum is negative as the Fast Stochastic generates a cross sell signal. Prices are oversold as the Fast Stochastic shows a reading of 12, below the oversold trigger level of 20. Medium term momentum also turned negative as the MACD (Moving Average Convergence Divergence) index generated a cross sell signal. This scenario occurs when the MACD line (the 12 day moving average minus the 26 day moving average) crosses below the MACD line). The MACD histogram prints in negative territory with a downward trajectory that indicates falling prices.

The Fed announced the reduction in bond purchases

The Fed kept short-term interest rates unchanged. The Federal Reserve said on Wednesday it would start cutting its monthly bond purchases in November. The process will see cuts of $ 15 billion per month, $ 10 billion in treasury bills and $ 5 billion in mortgage-backed securities, from the $ 120 billion currently purchased by the Fed. The Fed also said it believes inflation should be transient.

This article originally appeared on FX Empire

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