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Overview
Silver (XAG/USD) faces downward pressure amid the U.S. dollar’s resurgence, yet it’s geared up for a notable week, with Federal Reserve Chair Jerome Powell’s imminent speech being the focal point.
Silver’s Performance and U.S. Treasury Impact
Spot silver has seen a decline to $24.06 per ounce, but its weekly surge of approximately 5.64% highlights its resilience. The ascent to its August 1st peak was propelled by diminishing U.S. Treasury yields.
Federal Reserve’s Stance and Market Sentiment
Two Federal officials recently acknowledged the uptick in bond market yields, hinting at a potential pause in interest rate hikes. Although the prevailing sentiment at the Fed is inclined towards maintaining the current rates, potential cuts in 2023 aren’t ruled out. Investors are eagerly awaiting insights from both Powell and ECB President Christine Lagarde during the annual Jackson Hole symposium.
Powell’s Anticipated Address
Ever since Powell assumed the Fed Chair position in 2018, his Jackson Hole addresses have been influential, covering a broad spectrum of policy shifts. This year, with the backdrop of waning inflation and a sturdy economy, he might adopt a balanced approach, refraining from giving any explicit directions and maintaining a pragmatic outlook on monetary policy.
Short-Term Forecast
Silver’s recent rally was truncated, pointing towards an aggressive short-covering spate. The rising U.S. dollar, marking its sixth consecutive weekly gain, has impacted silver adversely. Further exacerbating the decline is gold’s retreat and the ebbing holdings of the SPDR Gold Trust. Given these dynamics, the long-term outlook for silver appears bearish.
Technical Analysis
Silver (XAG/USD) is exhibiting a minor increase, moving from 24.04 to its current 4-hour price of 24.06. Its position relative to the 200-4H moving average at 23.82 suggests bullish momentum, a sentiment echoed by its stand above the 50-4H moving average of 23.19.
The 14-4H RSI sits at 67.10, leaning towards the overbought territory, indicating stronger upward momentum. However, caution is needed as it approaches the main resistance area bracketed between 25.00 and 25.27. With the commodity holding well above its main support zone of 22.70 to 22.28, the current market sentiment for Silver over the short-term can be characterized as bullish.
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