Silver price edged closer to the crucial level of $22.50; a level last seen in early June. The rallying comes after Jerome Powell hinted that the Fed tapering its interest rate hikes in December.
What’s driving silver market?
Silver price is largely reacting to the Fed Chair’s speech on Wednesday. Jerome Powell stated that the central bank may ease on its aggressive interest rate hikes in its December meeting. However, he was quick to emphasize that Fed officials still have to work hard to deal with the inflationary pressures.
On the one hand, the assertions boosted silver price as the US dollar dropped to an intraday-low of $105.73. However, as an industrial metal, high inflation has yielded persistent demand concerns. As such, the asset may remain subject to curbed gains in the short term.
Silver price prediction
As I forecast in my last silver price article, hopes that the Fed will taper its interest rate hikes would attract enough buyers to push the asset to the resistance level at 22.22. Indeed, Fed Chair’s speech on Wednesday was the catalyst that fanned the rally to the aforementioned level.
As predicted in the stated article, the knee-jerk reaction to Powell’s speech did not yield enough momentum to break the resistance at 22.22 as at the time of writing. Even so, it is trading above the 25 and 50-day EMAs as shown on its daily chart.
Based on both the fundamentals and technicals, I expect silver price to rally further although its gains will likely be curbed. In the short term, it may ease to 21.94 before another attempt by the bulls to break the resistance at 22.22. If successful, it may hit 22.50 for the first time since 6th June. For this bullish thesis to be rendered invalid, the price will need to drop to the psychological level of 21.00, which is along the 25-day EMA.