Silver (XAG-USD) price started 2023 with a significant correction. Since the start of the year Gold (XAU-USD) price has also been in a downtrend. Silver price per ounce has depreciated by 11% in its value within the past few weeks. A significant reason behind the correction in precious metals is the strength of the DXY index.
After tagging the lows of 100.82, the DXY chart has experienced a strong rebound. The dollar strength index has soared by 3.7% since the start of February 2023. Analysts are producing this price action to the recent rate hike of 25 basis points and the January CPI data.
As per the Silver news today, Goldman Sachs has revised its interest-rate forecast for 2023. According to the investment giant, it expects the US Federal Reserve to hike interest rates another 3 times. This would mean another 75 basis points from the current level and a terminal rate of 5.25-5.5%.
It would be very difficult for precious metals to thrive in a high-interest rates environment. The recent rally in Gold and Silver was due to an expected pause in rate hikes. However, in light of the recent developments, a pause is unlikely to occur till the 2nd half of 2023. If DXY keeps gaining strength, then XAG/USD could flip really bearish.
Technical analysis of the Silver price chart reveals very important information. After a sideways price action during the holiday season, XAU/USD price got rejected from the downward trendline. Consequently, the price tanked by 11% in the following weeks and now trading at $21.19.
The price action has also formed a symmetrical wedge pattern which shows the indecision. The silver market has been in a sideways accumulation for the past few years. Nevertheless, the price is still trading above the 200-day moving average as well as the 200-week moving average.
If bulls could orchestrate a breakout in the upwards direction, then I expect Silver to surge to $30 level in 2023.
This post was last modified on %s = human-readable time difference 11:07