Silver Price Analysis: XAG/USD creeps higher as ‘double bottom’ emerges

Silver advanced 0.20%, after Powell's hawkish comments.
Technicals: Uptrend within descending channel, potential 'double bottom' pattern.
Resistance levels: $29.50, $30.84 (June 21 high), $32.29 (May 29 peak), $32.51 (YTD high).
Support points: $29.00, $28.57 (June 26 low), $27.59 (April 15 low).

Christian Borjon Valencia FXStreet

Silver prices rose as Tuesday’s North American session finished, trading at $29.51 and registering gains of more than 0.20% at the time of writing. The grey metal advanced as Fed Chair Jerome Powell delivered hawkish remarks in an ECB event in Portugal, where he acknowledged that the Fed’s dual mandate risks are more balanced.

XAG/USD Price Analysis: Technical outlook

Silver’s uptrend remains intact but is capped to the upside and downside by a descending channel. Although it has formed a ‘double bottom’ chart pattern, buyers lack the momentum to clear the top of the channel, as depicted by the Relative Strength Index (RSI) almost flat at the neutral midline.

To confirm the ‘double bottom’ chart pattern, XAG/USD needs to crack the next resistance level, which is $29.50. Once surpassed the next stop would be the neckline' at $30.84, the June 21 high, followed by the May 29 peak of $32.29. A breach of the latter will expose the year-to-date (YTD) high of $32.51.

Conversely, if XAG/USD falls below $29.00, the next support level would be the June 26 low of $28.57. Clearing this level could lead to a drop to the April 15 swing low of $27.59.

XAG/USD Price Action – Daily Chart

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Ethereum Price Forecast: BitMine extends ETH buying streak, says long-term outlook remains positive

Ethereum (ETH) treasury firm BitMine Immersion continued its weekly purchase of the top altcoin last week after acquiring 45,759 ETH.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.