quick look
- Silver prices fell from $28.53 to $27.90, weighed down by expectations of a US interest rate hike.
- US inflation persisting at 3.5% (3.5%) y/y; Interest rate cuts are now unlikely until September.
- Upcoming US economic data, especially the core Producer Price Index (PPI), are crucial to the Fed's decisions.
- Technical analysis shows resistance at $29.06 and support at $27.53, with a pivot point at $28.50.
Silver prices have recently seen a modest decline, falling from a three-year high of $28.53 to around $27.90. This decline appears to be a direct response to the market's reassessment of the US Federal Reserve's likely path on interest rates. The latest US CPI data for March showed a continuing inflationary trend, with year-on-year numbers rising to three-point-five percent (3.5%) and monthly numbers rising to zero-point-four percent (0.4%). Hotter-than-expected inflation data has reinforced expectations that the Fed may maintain higher interest rates for longer. Initially, markets were hoping for a rate cut as early as June; However, the forecast has now changed, suggesting a more likely timeline extending into September, according to the CME FedWatch tool.
The interaction between industrial demand and safe haven attractiveness
Silver's unique position in the market stems not only from its industrial applications, but also from its status as a safe-haven asset, especially during geopolitical tensions such as those currently unfolding in the Middle East. This dual role supports silver prices, providing a cushion against further significant declines. However, the growing appeal of higher returns on interest-bearing assets is challenging silver's appeal as an investment. Investors are closely monitoring upcoming US economic data, especially the Core Producer Price Index (PPI) for March, which is expected to show a slight decline to zero.2% (0.2%) on a monthly basis from the previous zero. – Three percent interval (0.3%). The outcome of this data will be pivotal in shaping the Fed's policy direction, with the market also poised to gain key insights from upcoming speeches by members of the Federal Open Market Committee (FOMC).
Technical analysis of silver and future expectations
Technically, silver is currently hovering around the $27.90 level, showing minimal change after the previous session's 0.78% (0.78%) decline. The technical pivot point of the market is at $28.50, which will be crucial in determining the future direction of silver prices. Resistance levels have been identified at $29.06, $29.57, and $30.26, representing potential barriers to upward price movements. Conversely, immediate support for silver is at $27.53, with stronger support levels at $26.20 and $26.43. The fifty-day and two-hundred-day EMAs, positioned at $24.88 and $23.70 respectively, indicate a bearish outlook below the pivot point. However, a break above the $28.50 level could signal a shift towards a bullish market outlook. Market participants are also monitoring Fibonacci retracement levels, suggesting that a drop below $27.52 could lead to further declines towards the $26.91 region.
The interplay between economic indicators and market sentiment will be crucial in predicting the future path of silver prices. Investors and traders alike will need to stay informed of macroeconomic developments and policy signals from central banks to make informed decisions in the silver market.
