Silver price eased on Tuesday as the UBS-Credit Suisse deal brought some calmness in the financial markets. Focus now is on the Federal interest rate decision for further cues on where the interest rates are headed.
The UBS-Credit Suisse deal, which has been welcomed by the Federal Reserve, Treasury Department, and ECB, continues to bring some calmness to the financial markets. Granted, traders remain cautious of the probable spread of the banking crisis worldwide. Indeed, this is largely behind the rallying of silver and other precious metals in recent sessions.
The focus is now on the Fed interest rate decision scheduled for Wednesday. Indeed, this is one of the central bank’s toughest call in a long time. Investors are keen on whether it will continue to hike rates to deal with the stubbornly high inflation or pause on them amid the banking crisis.
In addition to its sensitivity to interest rates and the market sentiment, silver price movements are also impacted by the metal’s industrial demand. With regard to the latter factor, the focus has particularly been on the Chinese economy in recent months.
This is based on the highly anticipated recovery of the world’s second largest economy after the lifting of stringent COVID-19 restrictions. Notably, China is the leading consumer of silver and other industrial metals.
On the one hand, optimism over the Chinese economy is one of the factors that have continued to support silver price above the psychologically crucial zone of $20.00. Nonetheless, the rebound appears to be slower than expected; an aspect that has curbed the commodity’s market gains.
Earlier in March, officials in a major political meeting highlighted their intentions to avoid approving a large stimulus via the property market or infrastructure investment. Besides, they set a rather modest economic growth target of about 5% for the current year.
Silver price prediction
Silver price further eased on Tuesday after rising to a six-week high in the previous session. Even so, it continues to find support at 22.33 for the second session in a row as traders focus on Wednesday’s Fed interest rate decision.
Seeing that the asset continues to trade above the 25 and 50-day EMAs further signals that the bulls are still in control. In fact, for as long as it continues to trade above the support level at 21.13, this cautiously bullish thesis will remain valid. On the upside, 23.00 will be a resistance level worth watching in reaction to the Fed decision.
In the short term, silver price may continue to hover around 22.33. Post the Fed decision, a hawkish tilt may yield a decline to the 50-day EMA at 21.95 or lower at 21.50.