Silver Price Forecast: XAG/USD tumbles to $31.50 with eyes on FOMC minutes
|- Silver price plummets to $31.50 amid caution ahead of Fed’s May policy minutes.
- Fed policymakers support higher interest rates for a longer period.
- Silver price consolidates near multi-year high around $32.50
Silver price (XAG/USD) posts a vertical fall to near the crucial support of $31.50 in Wednesday’s early New York session. The white metal weakens as the US Dollar and bond yields recover amid caution ahead of the release of the Federal Open Market Committee (FOMC) minutes of the May policy meeting that will be published later the day. The FOMC minutes will provide a detailed explanation behind policymakers’ view on the interest rate outlook.
The market sentiment is slightly cautious as Federal Reserve (Fed) policymakers continue supporting that interest rates should remain at their current levels until inflation returns sustainably to the desired rate of 2%. S&P 500 futures posted losses in the European session, exhibiting a decline in investors’ risk-appetite.
The US Dollar Index (DXY), which tracks the Greenback’s value, jumps to 104.90. 10-year US Treasury Yields rise to 4.46% as hawkish guidance on interest rates from Fed officials has deepened uncertainty over Fed reducing interest rates from the September meeting. On Tuesday, Cleveland Fed Bank President Loretta Mester said that he wants to see inflation declining few more months to be sure before considering rate cuts.
Higher yields on interest-bearish assets increase the opportunity cost of holding investment in the non-yielding assets, such as Silver.
Silver technical analysis
Silver price turns sideways after printing a fresh multi-year high near $32.50. The white metal delivered a sharp upside move after breaking above the horizontal resistance plotted from April 12 high at $29.80. The upward-sloping 20-period Exponential Moving Average (EMA) near $31.40 suggests that the upside trend is intact.
The 14-period Relative Strength Index (RSI) shifts comfortably into the bullish range of 60.00-80.00, indicating that momentum remains leaned to the upside.
Silver four-hour chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.