- Silver has rebounded from one-week lows at $24.12 to near $24.50 as markets await the Fed meeting minutes release.
- Rising US yields and USD strength have weighed recently, though geopolitics remains a source of support.
- Dips towards $24.00 may thus be subject to being bought into.
Spot silver (XAG/USD), whilst continuing to trend gradually to the downside as US yields and the US dollar continues to advance ahead of the release of the minutes of the last Fed meeting, has rebounded in recent trade. Spot prices hit fresh one-week lows at $24.12 per troy ounce earlier in the session but have since rebounded back towards $24.50 where they now trade with gains of about 0.6% on the day. That means XAG/USD has recovered back above its 50-Day Moving Average in the $24.30s, a level that has been offering support over the past three sessions.
But against the backdrop of further hawkishness from Fed policymakers in recent days ahead of what is likely to be very hawkish-sounding Fed minutes release at 1900BST, the risks remain tilted towards higher US yields and a stronger US dollar. Given silver’s negative correlation to both of these, that suggests a continued steady grind lower towards $24.00 is more likely than not. Silver bears will thus be eyeing a test of recent lows just under $24.00, which also happen to coincide with the 200DMA.
Was it not for the high level of geopolitical risk premia priced into precious metals markets, plus ongoing demand for inflation protection and investors mull the inflationary impact of the Russo-Ukraine war, XAG/USD would likely be significantly lower. Whilst Fed hawkishness, rising yields and the risk of a stronger US dollar are all negative for silver, it would be brave to call for silver to drop all the way back to annual lows in the $22.00 area.
The US and UK both toughened financial sanctions on Russia on Wednesday, while the EU is in the process of passing sanctions on imports of Russian commodities, including coal and oil. Meanwhile, there have not been any fresh indications recently that a Russo-Ukraine peace deal might be near, and Russia shows no signs of wanting to end its invasion of Ukraine. As a result, dips towards $24.00 may be bought into in the short term.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD clings to gains near 1.0700, awaits key US data
EUR/USD clings to gains near the 1.0700 level in early Europe on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.