Silver Price Forecast: Higher after Fed Rate Hike; Future Uncertainty Looms

Highlights

• Comex silver climbs to one-week high with Fed rate hike aftermath.
• Possibility of future rate hikes could temper silver’s upward momentum.
• Central banks’ actions and economic data crucial for silver’s short-term outlook.

Overview

Comex silver experienced a boost in trading on Thursday, climbing to a one-week high, supported by a weaker dollar and the aftermath of the expected interest rate hike from the U.S. Federal Reserve Chair Jerome Powell. However, the precious metal’s upward momentum could be tempered as the Fed hinted at another rate hike later in the year. The possibility of additional rate increases will largely depend on upcoming economic data.

Fed Rate Hike Possibility Drawing Attention

The Federal Reserve’s decision to raise interest rates by a quarter-of-a-percentage point on Wednesday, with the potential for another 25 basis-point hike in September, has drawn attention from silver investors. Powell’s remarks offered reassurance by signaling that the Fed is no longer forecasting a U.S. recession.

Silver, being sensitive to rising interest rates, faces the challenge of increased opportunity costs for investors holding the non-yielding asset. Nevertheless, Comex silver found support from a weaker dollar, making it more affordable for holders of other currencies.

Traders Eyeing ECB, BOJ Monetary Policy Activity

Market participants are keeping a close eye on the European Central Bank’s policy decision, expected to raise rates for the ninth time and shift towards a “data-dependent” approach. Moreover, traders are eagerly awaiting the Japanese central bank’s actions regarding its yield control program, which could influence silver’s performance in the market.

US GDP Report on Tap

In addition to these central bank actions, the United States’ gross domestic product (GDP) data for the second quarter will be reported later in the day, providing further insights into the economic landscape.

Heightened Volatility Ahead

The Fed’s stance on potential future rate hikes has caused uncertainty, leading to fluctuations in silver prices. Traders are closely monitoring upcoming data releases to gauge the precious metal’s trajectory. As the Fed continues its fight against inflation and seeks to stabilize the economy, its future policy decisions will be influenced by additional information and its implications for monetary policy.

Short-Term Outlook:  Cautious Buying

In conclusion, the silver market remains on edge as central banks’ decisions and economic data play crucial roles in determining the metal’s short-term outlook. While silver prices have surged to a one-week high, investors should remain cautious amid potential volatility caused by interest rate dynamics and global economic conditions.

Technical Analysis

Comex Silver is displaying bullish sentiment as it reached a one-week high on Thursday, buoyed by a weaker dollar and the aftermath of the Fed’s expected rate hike. The possibility of additional rate increases hinged on upcoming economic data, leading to uncertainty.

The current 4-hour price of 25.215 indicated a slight uptrend from the previous close of 25.145, while being above both the 200-4H and 50-4H moving averages. The 14-4H RSI at 63.69 signaled positive momentum. The main support area at 24.425 to 24.750 and the main resistance area at 25.970 to 26.425 shaped the market’s neutral to bullish outlook.