Silver Price Forecast: XAG/USD slides below $23.00 on a hawkish Fed
|- XAG/USD slumped late during the American session as the greenback’s rallied on a hawkish Fed.
- A surprisingly hawkish Fed’s Chairman Jerome Powell weighed on the silver drop.
- The Relative Strenght Index and the moving averages in the 1-hour chart support the XAG/USD bullish bias.
During the American session, the XAG/USD seesawed around the $22.60-$23.16. The catalyst was a hawkish monetary policy statement by the Federal Reserve. That said, as the Asian session kicks in, silver is trading at $22.69, up 0.11% at the time of writing.
On Wednesday, the FOMC released its monetary policy statement. The Fed kept the rates and the QE program unchanged.
Fed’s bond tapering around the corner
Regarding the bond taper, the Fed said that “the Committee judges that moderation in the pace of asset purchases may soon be warranted.” The reaction in the commodities market was immediate. Despite that, the sentence looked hawkish silver rose to a fresh weekly high at $23.16. But as Jerome Powell, Fed’s Chairman, hit the center stage, XAG/USD plunged some $0.60, down to $22.57.
Summarizing some of his remarks, he said that the “Fed discussed the appropriate pace of tapering once conditions for doing so are satisfied.” Further, he added that “there is broad support on the committee for timing and pace of taper.” Regarding the relationship between the labor market and QE’s reduction, he commented that he does not need a robust job report to go ahead with the tapper.
XAG/USD Price Forecast: Technical outlook.
1-hour chart
XAG/USD is trading above the short-term time frame simple moving averages (SMA’s) at $22.69. For the bulls to resume the upward pressure, they will need to reclaim $23.00. In case of a breach of that level, the next supply zone would be the September 22 high at $23.12. A decisive break of the latter would expose $23.50.
On the flip side, a break below the September 22 low and confluence of the 50 and the 100-SMA around $22.55 could lead to further losses. The first support area would be $22.34. The following demand zones would be September 20 swing lows around $22.14 and 2021 lows around $22.01.
The Relative Strenght Index is at 50, slightly up, supporting the bullish bias.
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