Silver Price Prediction – Prices Consolidate Ahead of the Fed

Silver prices moved sideways on Monday but continued to gain traction against gold. The Federal Reserve meets mid-week, and their views on inflation will help provide the next direction for the precious metals complex. Copper prices have also been rangebound, and traders are awaiting Jay Powell’s commentary to determine a future upside to materials.  On Monday, the dollar moved sideways, neutral for silver prices, while U.S. Treasuries moved higher, which generated headwinds. Hedge funds reduced both long and short positions in futures and options according to the most recent commitment of traders report.

Technical Analysis

Silver prices are consolidating building energy and waiting for an impetus from the Federal Reserve. Resistance is seen near a downward sloping trend line that comes in near $28.35. Support is seen near the 50-day moving average at 26.91. Most of the price action is centering around the 10-day moving average as volatility has eased. The fast stochastic is chopping around between buying and sell signals which also reflects consolidation. The MACD (moving average convergence divergence) histogram is printing near the zero index level with a flat trajectory reflecting consolidation.

Commitment of Trader’s Analysis

Traders reduced both long and short positions in futures and options ahead of the Fed’s meeting this week. It’s hard to see prices moving higher or lower ahead of the Fed decision. Hedge funds remain long, with the open interest nearly 2.5-times higher for long positions than for short positions.  Hedge funds are betting that prices will move higher, which shows that sentiment is positive. If the Fed does not refer to inflation in their statement and does not provide a timeline for reducing bond purchases, the dollar is likely to tumble and silver prices should rally.