XAG/USD tests key support as hawkish Fed bets mount

Silver has not been spared in today’s metals market rout as markets continue to aggressively price in hawkish expectations for the Federal Reserve. Price is down over 2.5% in today’s session to $62.713 as of the time of writing, with sellers looking to push prices lower.

Sellers would be encouraged by price trading below the 200-day SMA, suggesting that longterm momentum is shifting in their favor. Further confirmation would come from a decisive break below the $62.25–$62.98 support zone, which includes the 50% Fibonacci retracement level.

Buyers are expected to push back against a drop below this zone. However, with the dollar still strengthening across the board and gold trading around $4,270 at the time of writing, silver remains vulnerable to a breakdown that could give sellers greater control.

Are hawkish Fed bets becoming too aggressive?

Markets are ramping up bets for a rate hike at Wednesday’s FOMC meeting and increasingly pricing in further hikes. However, recent Fed communication may not fully support these expectations. Before last week’s CPI release, Fed Governor Christopher Waller expressed support for holding interest rates steady.

Even though sellers currently control silver and are looking to push prices lower, any shift away from these hawkish expectations could trigger an aggressive repricing and help silver recover some of its recent losses.