Silver Forecast: XAGUSD remains above $19.20 after FOMC Minutes

• Silver erases some earlier losses and is up more than 0.10% on Wednesday.
• The FOMC minutes showed the Fed’s commitment to tackle inflation, even if the economy slows.
• The Fed could even move to a “tighter stance” if inflation persists.
• Fed officials reiterated that a 75 basis point hike in July might be appropriate.

Silver (XAGUSD) bounced from weekly lows around $18.92 and was barely up during the American session following the release of the US Federal Reserve’s June Meeting Minutes, which show that policy makers debated that a rise in 50 or 75 basis points would be appropriate at the July meeting. At the time of this writing, XAGUSD is trading at $19.23.

FOMC Minutes Summary

The tone of the Federal Open Market Committee was in line with expectations: hawkish. Monetary policymakers said a 75 basis point rate hike is warranted and said even a “tighter stance” might be appropriate if inflation prevails. Turning to economic growth, policymakers said risks to the economic outlook are skewed to the downside and also viewed uncertainty about economic growth over the next two years as high.

Silver reacted lower after the publication of the Fed minutes, but turned 180 degrees and is trading in green territory. The US central bank’s commitment to reduce inflation will not deter them from raising rates above the neutral level. Due to the tightness of the labor market, they have room to maneuver before causing a jump in the unemployment rate, one of the consequences of a recession.

In the meantime, XAG/USD prices would continue to be under pressure to the downside in the short term. The greenback remains higher on the session, as reflected in the US dollar index, which is up 0.54% above the 107,000 mark. US Treasury yields jumped after the release of the minutes, although the 2yr-10yr yield curve remains inverted, indicating a recession could be just around the corner.

As for the data, the Services and Composites PMIs, presented by S&P Global and the US ISM, were published on the US calendar. The figures beat expectations but were lower than previous ones, indicating that the US economy is slowing.

Next week, the US economic docket will include the ADP job change, initial jobless claims and statements from Fed members on Thursday.

Silver (XAGUSD) Key Technical Levels