Silver Price Analysis: XAG/USD Updates Lows Around $24.50 Awaiting Fed

• The silver price has updated the daily low slightly below $24.50 as attention turns to Fed policy.
• Investors expect the Fed to raise interest rates by 25 basis points (bp) to 5.25-5.50%.
• Silver has dipped below the 23.6% Fibonacci retracement at $24.53.

The price of the Silver (XAG/USD) has set a new low of the day at $24.45 in the early stages of the New York session. The white metal has come under a lot of pressure as bullion has come under pressure ahead of the Federal Reserve’s (Fed) interest rate decision, due to be announced on Wednesday.

The S&P500 is expected to start the week on a positive note, following positive signals from futures overnight. The US Dollar Index (DXY) has tested the breakout of the consolidation formed around 101.00 after hitting a high of 101.41. US 10-year Treasury yields have fallen to around 3.81%.

Investors expect the Fed to further raise interest rates by 25 basis points (bp), to 5.25-5.50%. According to analysts at Goldman Sachs, the expected rate hike by the Federal Reserve at its next monetary policy meeting next week will be “the last” in the long tightening cycle of the US central bank.

But before that, attention will turn to the preliminary S&P Global PMI data for July in the United States. According to forecasts, the manufacturing PMI would increase slightly to 46.4 points, compared to the previous publication of 46.3 points. The services PMI would stand at 54.1 compared to the previous publication of 54.4 points. A figure below 50.00 is considered a contraction of economic activity.

Silver Technical Analysis

Silver price has slipped below the 23.6% Fibonacci retracement (traced from the June 23 low of $22.11 to the July 20 high of $25.27) at $24.53 on a two-hour scale. The 20-period EMA at $24.67 acts as a roadblock for silver bulls.

Meanwhile, the Relative Strength Index (RSI) (14) has turned down in the bearish range of 20.00-40.00, indicating that the bearish momentum has been activated.

2 hour chart