Silver down more than 50% from all-time highs as Fed tightening risk weighs on the market
FUNDAMENTAL OVERVIEW
Silver has been falling hard in the recent days the fallout from the hawkish Fed decision continued to push real yields and the US dollar higher. We haven’t got any meaningful catalysts since the FOMC, so the markets continued to run mostly by inertia. The price has fallen more than 50% from the all-time highs.
As a reminder, the Fed delivered a hawkish surprise by projecting a rate hike this year (the consensus was for no cuts or hikes). The market increased rate hike bets with now 37 bps of tightening priced in by year-end. There's a 34% chance of a hike already in July and 68% probability of a move in September.
The economic data and financial markets will now guide the Fed as Warsh stated that “financial markets perform best when they react to incoming data and are less efficient when they have to ask how the Federal Reserve will react to the incoming data”. He added that “financial markets are the most important source of information to guide the central bank”.
Trump also posted on Truth Social and, unlike his usual stance under Fed Chair Powell, did not object to the Fed’s decision. In fact, he said that “rate hikes could happen,” which sounds like a green light for Warsh and the Fed to do whatever they deem necessary.
The signal is that the Fed is finally looking to deliver on its price stability mandate and bring inflation back to the 2% target that it’s been missing since 2021. If the data says they need to hike, they will. For a decent pullback, silver will need soft US data in the next weeks to trigger a dovish repricing that pushes real yields and the US dollar lower.
SILVER TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that silver has finally reached the major trendline around the 56.00 level. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a pullback into the downward trendline around the 65.00 level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 45.00 level next.
SILVER TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have another downward trendline defining the bearish momentum on this timeframe. If we get a pullback into the trendline, we can expect the sellers to lean on it with a defined risk above it to keep pushing into new lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the next trendline.
SILVER TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have yet another minor downward trendline. Again, since the bias remains bearish, the sellers will continue to look for opportunities to keep pushing into new lows. The buyers, on the other hand, will look for upside breaks to pile in and target new highs. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today, we get the US Jobless Claims data and the US PCE report. Tomorrow, we conclude the week with the final University of Michigan consumer sentiment survey.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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