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- Silver prices were above the $30 mark on Tuesday, and traders have their sights set on US interest rate policy direction for new cues.
Silver price stayed up on Wednesday, as markets remained expectant of Fed interest rate cuts. The commodity was at $30.87 per ounce in the intraday session, having risen by 0.3 percent. It was up by a similar margin in the futures market to trade at $31.14 per ounce according to data from COMEX. Silver price has been on a strong upward trajectory in July, gaining 5.8 percent since the month began.
Federal Reserve Chairman Jerome Powell stated on Tuesday that US inflation had cooled down, but did not provide a timeframe for initial rate cuts. In his semiannual Congressional testimony, Powell was careful not to preempt the Fed’s potential move before the release of June Consumer Price Index (CPI) figures.
Nonetheless, a combination of a decline in the inflation rate in May and a spike in the unemployment rate to 4.1 percent in June have formed a strong foundation for a potential rate cut in September. The impact is already reflected in the DXY index, which fell to its lowest level in a month this week. As of this writing, the Index, which weighs the US dollar’s strength against six other currencies, was at 105.03. The demand-side outlook for silver is strong, with the Bank of America forecasting a spike in silver prices to average $35 per ounce by 2026.
Technical analysis
The momentum on silver price indicates that the market is currently controlled by the buyers. The upward action will likely continue if the price stays above 30.80 in the spot market. That could see the first resistance encountered at 31.02, but a break beyond that mark could result in a stronger momentum to push the XAGUSD pair to 31.16. Alternatively, if the pair breaks below 30.80, it will signal control by the sellers, who will likely find the first support at 30.64. Extended control by the sellers will strengthen the downward momentum break the first support. Also, it could send silver price to test 30.50.
