- Silver price starts the week strong and approaches $18.40 ahead of the FOMC meeting.
- Weaker-than-expected data, indicating a further deterioration in the US economy, underpins US Treasury yields.
- Silver Price Forecast (XAGUSD): Trending Down, to retest the $18.00 level in the short term.
the price of silver it is pulling back from the daily highs near the $18.70 region towards the $18.40 zone. A mixed market environment, spurred by the upcoming Federal Reserve Open Market Committee meeting, along with US corporate earnings and preliminary US GDP readings, which are expected to expand but on the verge of confirming a technical recession in the US, keeping silver prices down.
XAGUSD started the week trading around $18.60, rallied steadily near the R1 daily pivot at $18.84, but dipped below the S1 daily pivot and reached the daily low at $18.30, but regained some ground, meandering into around the S1 pivot point at $18.40.
Despite weaker US data, safe-haven flows move towards the dollar
Breaking news confirmed that Gazprom has reduced natural gas flows to 20% in the Nord Stream 1 pipeline, causing the dollar index to jump to 106,420. Meanwhile, US economic data continues to show the economy deteriorating as the US Dallas Fed Manufacturing Index slumped to -22.6 from -12.5 in July. This, coupled with the Chicago Fed National Activity Index, which fell to -0.19 in June, keeps recession fears on investors’ minds. With the US Federal Reserve forecast to rise 75 basis points on Wednesday, the white metal is expected to accelerate its losses as rising US Treasury yields add to USD appetite .
Looking at money market futures, expectations of a 75 basis point rate hike by the Fed stand at a 75% chance, while estimates of a 100 basis point hike stand at by 25%.
Looking at US Treasury yields, the benchmark 10-year note coupon is up two and a half points, yielding 2.807%, while the US 2-10 year yield curve remains inverted for the 16th day. consecutive, with -0.207%.
What to watch out for
On Tuesday, the US economic docket will include BC Consumer Confidence, New Home Sales and the start of the FOMC’s two-day monetary policy meeting.
Silver (XAGUSD) Price Forecast: Technical Outlook
The price of silver is showing signs that the downward trend that has accelerated since mid-April is losing steam, unable to break the $18.00 barrier, which once broken, would open the door to further losses, towards the June lows. around $16.95. XAGUSD traders should note that the Relative Strength Index (RSI) broke out of oversold levels but is heading lower, about to cross below the RSI 7-day SMA, opening the door to a higher downward action.
Therefore, the first support for XAGUSD would be the low of the year at $18.14. XAGUSD break below will expose $18.00, followed by a challenge at $17.00, before updating 2-year lows around June 2020 lows at $16.95
Source: Fx Street
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