Silver price edged higher on Thursday although it has recorded subtle movements for the second session in a row. The bulls are striving to defend the support at $18.90 after it dropped to the level in the previous session. Since the beginning of the week, it has been trading the once steady support zone of $20 as traders awaited the Fed meeting minutes. Subtle movements after the release of the minutes signal that the market has already priced in further interest rate hikes in the coming months.
Fundamentals
As shown in the minutes, the Fed officials expect high interest rates to remain as the bank strives to deal with high inflation. Notably, an ultra-hawkish Fed has been weighing on silver price in recent months. Indeed, it has dropped by close to 30% over the past seven months. In fact, the same is true for other precious metals. For instance, gold price has been trading below $1,700 since the beginning of the week.
Investors are now keen on the US CPI data later on Thursday for further cues on the Fed’s next move. Economists expect a reading of 8.1% YoY compared to the prior month’s 8.3%. With the exclusion of the volatile food and energy components, the forecast core CPI of 6.5% is higher than the previous 6.3%. While silver is a conventional hedge against inflation, higher-than-expected readings will likely exert pressure on the prices based on the Fed’s position on the matter.
Silver price prediction
Silver price has been in the red for seven consecutive sessions; trading below the critical support-turn-resistance zone of 20 since the beginning of the week. As at the time of writing, it was at 18.96; down by 0.25% as the bulls defend the support at 18.90.
As shown on its daily chart, silver price continues to trade below the 25 and 50-day exponential moving averages. Besides, the relative strength index (RSI) was at 45, which is below the neutral level.
Based on both the fundamental and technical indicators, I expect the metal to remain in a bearish trend. It will likely ease on the downtrend to return to the RSI’s neutral level before recording further losses.
In particular, the range between 19.55 and 18.90 will be worth watching in the short term. However, higher-than-expected US CPI numbers may give the bears an opportunity to hit a two-week low at 18.50.
