Silver prices hover near $28 as central bank decisions approach
FUNDAMENTAL OVERVIEW:
- Silver prices are trading sideways as investors adopt a cautious stance ahead of crucial central bank decisions.
- The Federal Reserve is anticipated to maintain interest rates on Wednesday, while the Bank of Japan may implement a ten-basis-point hike.
- Simultaneously, a subdued economic outlook in China is dampening silver demand.
Silver prices remained subdued for a second day, hovering near $27.80 per ounce during early Asian trading on Tuesday. Market participants await the Federal Reserve’s interest rate decision, scheduled for Wednesday.
While the potential for further interest rate hikes could pressure silver, a non-yielding asset, expectations of rate cuts beginning in September are limiting downside risks. Recent signs of cooling inflation and a softening labor market in the U.S. have bolstered this outlook for monetary policy easing.
Meanwhile, the Bank of Japan is expected to tighten its monetary policy with a ten-basis-point rate hike, while the Bank of England’s policy trajectory remains uncertain.
Furthermore, the value of safe-haven Silver is experiencing pressure as worries about Middle East tensions diminish. According to Reuters, Israel has stated that its reaction to the Hezbollah rocket attack on the Israeli-occupied Golan Heights on Saturday will be restrained to avoid triggering a large-scale conflict. This approach is reinforced by US diplomatic efforts to moderate Israel’s response and prevent attacks on Beirut or significant civilian infrastructure in Lebanon.
XAG/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Silver is currently trading within a down channel.
Silver is positioned below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Selling zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 28.16
Immediate support level: 27.27
HOW TO TRADE SILVER
Silver experienced a sharp rally but encountered resistance, forming a double-top pattern. Prices subsequently reversed downwards and consolidated within a range. A recent upward attempt failed to gain traction, leading to a sharp decline. Currently, silver is trading sideways near resistance. A rejection at this level could trigger further downward movement.