Silver price showed strength in last week’s sell-off as gold price fell more than silver. However, after a breakdown below the $22.1 support, silver price is plummeting more than gold this week. At the time of writing, Silver is priced at $21.375, which is a new 7-month low for the metal.
The preferred gauge of the US Federal Reserve, PCE Inflation, increased less than expected in August. Despite this, DXY had a 0.5% surge on Monday. This resulted in an intense sell-off in precious metals like Gold and Silver. Gold price is down 0.75%, while Silver is trading 3.4% below its last week’s close.
Gold continues to remain unattractive for investors as DXY makes its way towards its 10-month highs. According to a market analyst at Kinesis Money, investors have started to accept that interest rates are likely to remain high for a long time. This is a major reason behind the ongoing downtrend in the Silver price per ounce.
In August, the US reported a slight ease in PCE inflation. As a result, traders expect the Fed to keep the interest rates in the 5.25%-5.5% range for the rest of the year. According to future contracts, the market expects the Fed to initiate rate cuts after the first half of 2024.
XAG/USD has broken below its support level of $22-$22.5. This key support level has been acting as a major demand zone for the past few months. At press time, the price of the safe haven asset is standing 8.8% below the 200 MA as bears continue to gain momentum. Only a reclaim of $22.5 can make Silver price prediction bullish once again.
A glance at the chart below shows the price heading towards the $20.5-$21 demand zone, which is highlighted as a green box. Another potential support level can be the downward trendline, which has been respected as support multiple times since the start of 2023.
This post was last modified on Oct 02, 2023, 16:11 BST 16:11