Silver Price Forecast: XAG/USD plunges to near $22 as Fed rate-cut optimism fades

Silver price plummets to near $22 as the Fed is expected to reduce interest rates from May.
The USD Index struggles for a firm-footing despite easing Fed rate-cut bets.
Silver price declines further towards $21.88.

Sagar Dua FXStreet

Silver price (XAG/USD) nosedived to near $22.00 on Monday, more than 2.5% down from its previous close. The white metal is heavily dumped by the market participants as trades dialled back expectations of early rate cuts by the Federal Reserve (Fed).

The S&P500 is expected to open on a positive note, considering positive cues from the overnight futures. The US Dollar Index (DXY) is also facing pressure despite investors have postponed their expectations of rate cut from Fed to May. 10-year US Treasury yields have dropped further to near 4.09%.

The CME Fedwatch tool indicates that investors are now anticipating an interest rate cut in May as price pressures are still stubborn due to robust households’ spending and upbeat labor market conditions.

This week, market participants will focus on the United States Q4 Gross Domestic Product (GDP) data, which will be published on Thursday. An upbeat GDP data would underscore the ‘higher interest rates’ narrative. Fed policymakers have been considering early rate cuts as premature that could dampen all efforts yet don to tame price pressures.

Silver technical analysis

Silver price witnesses an intense sell-off after delivering a breakdown of the horizontal support plotted from December 13 low at $22.51. The asset is expected to find an interim support near November 13 low at $21.88. The 50-period Exponential Moving Average (EMA) near $22.80 continues to act as a barricade for the Silver price bulls.

The 14-period Relative Strength Index (RSI) has shifted into the bearish range of 20.00-40.00, which indicates that a downside momentum has been triggered.

Silver four-hour chart

XAG/USD

Overview
Today last price	21.99
Today Daily Change	-0.59
Today Daily Change %	-2.61
Today daily open	22.58

Trends
Daily SMA20	23.3
Daily SMA50	23.68
Daily SMA100	23.19
Daily SMA200	23.56

Levels
Previous Daily High	22.84
Previous Daily Low	22.46
Previous Weekly High	23.33
Previous Weekly Low	22.42
Previous Monthly High	25.92
Previous Monthly Low	22.51
Daily Fibonacci 38.2%	22.61
Daily Fibonacci 61.8%	22.7
Daily Pivot Point S1	22.42
Daily Pivot Point S2	22.25
Daily Pivot Point S3	22.04
Daily Pivot Point R1	22.8
Daily Pivot Point R2	23.01
Daily Pivot Point R3	23.18

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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