Silver Trading Potential: Hawkish Signals from the Fed Impact Prices
Hawkish signals from the Fed caused silver to decline.
FUNDAMENTAL OVERVIEW
Federal Reserve’s Hawkish Tone and Unemployment Rise
Federal Reserve Chair Jerome Powell’s remarks on the prolonged tightening process and persistent inflationary pressures influenced the silver market, causing a decline of -1.36%. The settlement price reached 68308, reflecting the market’s response to Powell’s statement. Moreover, the week ending June 17 witnessed a higher-than-anticipated number of Americans, with 264,000 individuals applying for unemployment benefits. This figure surpassed the previous week’s revised total and pointed to a slight alleviation of the US labor market’s tightness. US companies are beginning to experience the effects of the Federal Reserve’s aggressive tightening campaign, further reinforcing this trend.
Silver’s Volatility Amidst Economic Factors
While investors navigate the impact of rising interest rates, silver’s volatility persists due to additional factors such as the ongoing conflict in Ukraine and the global economic slowdown. Despite these challenges, analysts project a potentially remarkable year for silver, with expectations of reaching a 9-year high in 2023. This surge can be attributed to growing demand from both investors and industrial users, indicating a positive outlook for the precious metal.
Silver Miners Bracing for Tough Times
Silver miners are preparing for challenging times as prices experience a decline. Rising costs and labor shortages have already placed a strain on the industry, and the recent drop in prices exacerbates the pressure on profit margins. The combination of these factors poses significant challenges for silver mining companies moving forward.
Weakening Silver Demand
Industrial production slowdowns in recent months have contributed to a decline in silver demand. Ongoing conflicts, such as the war in Ukraine, and the global economic deceleration have contributed to this weakening trend. These factors collectively impact the overall demand for silver in various industries.
SILVER TECHNICAL ANALYSIS DAILY CHART:
Analyzing Silver’s Technical Performance
Technical Overview: Silver currently operates within a downward channel, indicating a bearish trend. All Simple Moving Averages (SMA) position silver below their respective levels. The Relative Strength Index (RSI) suggests a bearish market sentiment, while the Stochastic oscillator indicates a downtrend. Key levels:
- Resistance: 22.44
- Immediate Support: 22.16
UNLEASH SILVER TRADING POTENTIAL
Strategic Approach to Silver Trading
Having witnessed a recent reversal from an upward climb, silver is currently trading lower. This shift, coupled with its position below a significant resistance level, suggests a slightly bearish outlook. If silver fails to breach this key area, a continued downward movement can be expected. Hence, the recommended trading strategy for the current scenario is to sell on the rise.
Trade Suggestion:
- Sell at 22.30
- Take Profit at 22.09
- Stop Loss at 22.46
With these insights, traders can make informed decisions in the silver market, leveraging current trends and potential trading opportunities.