Silver Price Analysis: XAG/USD jumps to near $23.50 as USD awaits Fed

• The price of Silver strengthens while the USD suffers a strong correction pending the Fed’s policy.
• The Fed is expected to keep interest rates unchanged but may offer a hawkish interest rate line outlook.
• Silver price rises strongly above the 38.2% Fibonacci retracement around $23.34.

The price of the Silver (XAG/USD) rises to around $23.50 after overcoming breakouts in back-and-forth trading early in the New York session. Previously, the white metal remained range-bound as investors stayed on the sidelines awaiting monetary policy from the Federal Reserve (Fed).

The S&P 500 opens on a slightly bullish note pending the Fed’s monetary policy. The Fed is expected to keep interest rates unchanged at 5.25-5.50% as core inflation continues to fall and economy continues to resist.

ANZ analysts expect the FOMC to keep rates stable and its restrictive bias. There are signs that both inflation and labor market pressures are easing, but considerable progress needs to be made. We expect the FOMC to revise upward its GDP forecasts for 2023 and 2024. This could mean slower speed of normalization in the Fed’s dual mandate, requiring rates to stay higher for longer.

The US Dollar Index (DXY) extends its correction below the crucial support of 105.00, as bets on a neutral interest rate policy by the Fed intensify. Meanwhile, US Treasury yields at 10 years fell sharply to around 4.32%. A surprise debate on rate cuts by Fed officials could boost demand for U.S. stocks and weaken the dollar’s appeal.

Silver technical analysis

Silver price rises strongly above the 38.2% Fibonacci retracement (traced from the August 30 high around $25.00 to the September 14 low of $22.30) around $23.34. The 20-period EMA around $23.20 is providing a cushion to silver bulls.

The Relative Strength Index (RSI) (14) rises above 60.00, indicating that bullish momentum has been triggered.

Silver Two Hour Chart