Silver Price Forecast: XAG/USD tumbles to $31.50 with eyes on FOMC minutes

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