- Silver erases some earlier losses and advances more than 0.10% on Wednesday.
- The FOMC minutes showed the commitment of the Fed to tackle inflation, even if the economy slows down.
- The Fed might even get to a “more restrictive stance” if inflation persists.
- Fed policymakers reiterated that a 75 bps hike in July might be appropriate.
Silver (XAGUSD) bounced off the weekly lows around $18.92 and edged barely up during the North American session after the release of the US Federal Reserve June’s meeting minutes, showing that policymakers debated that a 50 or 75 bps would be appropriate at the July meeting. At the time of writing, XAGUSD is trading at $19.23.
Summary of the FOMC minutes
The Federal Open Market Committee’s tone was in line with expectations: hawkish. Policymakers stated that a 75 bps rate hike is warranted and noted that even a “more restrictive stance” could be appropriate if inflation prevails. Concerning economic growth, policymakers stated that risks to the economic outlook are skewed to the downside and also judged that uncertainty about economic growth over the next couple of years was elevated.
Silver’s reacted to the downside after the Fed released its minutes but made a U-turn and is trading in green territory. The US central bank’s commitment to bring inflation down would not deter them from hiking rates above neutral. Due to the tight labor market, they have room to spare before causing a jump in the Unemployment Rate, one of the consequences of a recession.
In the meantime, XAGUSD prices would remain downward pressured in the near term. The greenback remains buoyant in the session as portrayed by the US Dollar Index, up by 0.54%, above the 107.000 mark. US Treasury yields jumped on the release of the minutes, though the 2s-10s yield curve remains inverted, signaling that a recession could be around the corner.
Data-wise, the US calendar featured Services and Composite PMIs, unveiled by S&P Global and the US ISM. Figures exceeded expectations but trailed previous readings, signaling that the US economy is slowing down.
The week ahead, the US economic docket will feature ADP Employment Change, Initial Jobless Claims and Fed speakers on Thursday.
Silver (XAGUSD) Key Technical Levels
|Today last price||19.2|
|Today Daily Change||-0.02|
|Today Daily Change %||-0.10|
|Today daily open||19.22|
|Previous Daily High||20.2|
|Previous Daily Low||19.1|
|Previous Weekly High||21.54|
|Previous Weekly Low||19.39|
|Previous Monthly High||22.52|
|Previous Monthly Low||20.22|
|Daily Fibonacci 38.2%||19.52|
|Daily Fibonacci 61.8%||19.78|
|Daily Pivot Point S1||18.82|
|Daily Pivot Point S2||18.41|
|Daily Pivot Point S3||17.71|
|Daily Pivot Point R1||19.92|
|Daily Pivot Point R2||20.61|
|Daily Pivot Point R3||21.02|
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