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Overview
Comex silver experienced a brief setback during the last session, but it is showing signs of recovery early on Friday. The market pulled back from a two-month high on Thursday, driven by a strengthening dollar and rising bond yields. However, the decline was tempered by optimism surrounding the U.S. Federal Reserve’s potential pause in rate hikes after the July meeting.
Silver Falls as Gold Retreats
The bounce in yields and the dollar has had a slight reverse effect on silver. Additionally, weak silver longs lightened their positions after gold traders faced resistance around the $2000 mark, leading to a sharp downside reversal for bullion.
The U.S. dollar gained 0.2% against other currencies following positive jobless claims data. This rise in the dollar made dollar-denominated silver more expensive for holders of other currencies. The data indicated a surprising drop in new claims for unemployment benefits last week, touching the lowest level in two months amid ongoing labor market tightness.
Last Fed Rate Hike of Tightening Cycle?
As the focus shifts to the upcoming U.S. central bank policy meeting, markets are pricing in a 25 basis-point rate hike from the Fed. Many economists polled by Reuters expect this hike to be the last increase in the current tightening cycle from the Fed.
Given its high sensitivity to rising U.S. interest rates, Comex silver has been affected by the expectations of a potential rate hike. However, there is a growing belief that the Fed is nearing the end of its interest rate hike cycle.
Despite this, it’s essential to recognize that interest rates are expected to remain elevated, and a rapid reversal of monetary policy is not on the immediate horizon due to the resilience of the U.S. economy.
Short-Term Outlook: Cautiously Optimistic
In conclusion, Comex silver is displaying resilience as it edges higher, supported by the potential pause in rate hikes and ongoing economic strength. As investors keep a close eye on the central bank’s decisions, the silver market is poised for a cautious and optimistic outlook in the short term.
Technical Analysis
Comex Silver’s sentiment is mildly bullish as the current price of 25.035 shows a slight uptrend from the previous close. Trading above the 200-4H and 50-4H moving averages at 23.724 and 24.769, respectively, indicates underlying strength. The 14-4H RSI at 48.69 suggests balanced momentum with weaker indications below 50.
Main support at 23.106-23.330 remains unthreatened, reinforcing the bullish outlook. However, traders should monitor potential resistance at 25.970-26.435. Overall, Comex Silver appears poised for positive momentum, but vigilance is necessary as market conditions may evolve. Furthermore, the market is vulnerable under the 50-4H moving average at 24.769.
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