- Silver price begins the week heavy, creeps towards $18.40 ahead of the FOMC meeting.
- Weaker than expected data flagging further deterioration of the US economy underpins US Treasury yields.
- Silver Price Forecast (XAGUSD): Downward biased, to restest the $18.00 mark in the near term.
Silver price is retracing from daily highs near the $18.70 region towards the $18.40 area. A mixed market mood, spurred by the Federal Reserve Open Market Committee meeting looming, alongside US corporate earnings and US GDP preliminary readings, expected to expand but at the brink of confirming a technical recession in the US, keep Silver prices heavy.
XAGUSD began the week trading around $18.60, climbed steadily near the R1 daily pivot at $18.84, but dived below the S1 daily pivot and hit the daily low at $18.30, but had recovered some ground, meandering around the S1 pivot point at $18.40.
Despite weaker US data, safe-haven flows move towards the greenback
Late newswires confirmed that Gazprom has reduced the Natural Gas flows to 20% in the Nord Stream 1 pipeline, which triggered a jump in the UD Dollar Index to 106.420. In the meantime, US economic data further shows deterioration in the economy, as the US Dallas Fed Manufacturing Index collapsed -22.6 vs. -12.5 in July. That, alongside the US Chicago Fed National ACtivivity Indeed tumbling to -0.19 in June, keep recession fears lingering around investors’ minds. With the US Federal Reserve expected to hike 75 bps on Wednesday, the white metal is expected to accelerate its losses as higher US Treasury yields boost the appetite for the greenback.
Regarding the money market futures, expectations for a 75 bps interest rate rise by the Fed lie at a 75% chance, while estimations for a 100 bps increase are at 25%.
Talking about US Treasury yields, the 10-year benchmark note coupon edges up two and a half basis points, yielding 2.807%, while the US 2s-10s yield curve remains inverted for the sixteenth straight day, at -0.207%.
What to watch
On Tuesday, the US economic docket will feature CB Consumer Confidence, New Home Sales, and the beginning of the two-day US FOMC monetary policy meeting.
Silver Price Forecast (XAGUSD): Technical outlook
Silver price shows signs that the downtrend that accelerated since mid-April is losing steam, unable to crack the $18.00 barrier, which once cleared, would open the door for further losses, towards the June lows around $16.95. XAGUSD traders should notice that the Relative Strength Index (RSI) exited from oversold levels but is aiming lower, about to cross under the RSI’s 7-day SMA, opening the door for further downwards action.
Therefore, the XAGUSD’s first support would be the YTD low at $18.14. XAGUSD break below will expose $18.00, followed by a challenge of the $17.00, before refreshing 2-year lows around June 2020 lows at $16.95.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.