Silver Price Prediction – Silver prices edged lower on more aggressive Fed rate hikes

Key Insights

• Silver prices moved lower. 
• Treasury yields traded flat for the second consecutive trading session.
• Oil prices surge amid lower inventories and the prospect of an EU ban on Russian oil. 

Silver prices slid despite worsening economic activity. Gold prices dipped as Fed minutes indicated additional 50-basis point rate hikes in the June and July meetings. The dollar holds near the one-month low due to the slowing economic growth.

Benchmark yields did not move much today in the wake of key economic data. The ten-year yield edged slightly lower as investors continued to digest the latest news.

Oil prices sustain upward momentum as the prospect of an EU ban on Russian oil becomes more likely as they are clenching an agreement. There was also a larger-than-expected decline in US crude oil inventories last week that sent prices soaring. 

First-quarter GDP dropped by a rate of 1.5%, worse than the expected decline of 1.3%. The pullback in GDP is the worst it has been since quarter 2 of 2020, which was during the peak of the pandemic. The GDP reading indicates a stronger pullback in the economy than economists expected. 

Private inventory and residential investment were revised to the downside, which countered the uptick in consumer spending by 3.1%. Economists expect an improved reading in Q2, as geopolitical tensions and the omicron variant weighed on economic activity. 

Jobless claims fell by 8,000 to 210,000 from 218,000 during the previous week.

Technical Analysis

Silver prices test the 10-day moving average of 21.7, dropping back to near its weekly low before rebounding and hovering right below the $22 level. XAG/USD maintains a bearish outlook for investors as Fed minutes indicate aggressive rate hikes, which underpins a stronger dollar.

When silver prices break below support, they will maintain a downward trajectory to the $20.4 level, which was hit on May 13th.

Support is seen near the 10-day moving average of $21.607. Resistance is seen near the May 6th highs of 22.6. Short-term momentum is positive as the fast stochastic had a crossover buy signal.

The medium-term momentum turns positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in positive territory, which reflects an upward trend in price movement.