- Silver price extends its losses below the 100-day EMA on risk aversion.
- The aggressive Fed tightening cycle and growing geopolitical tensions supported the US dollar.
- US central bankers have said the Fed needs to be tight, with rates around 4.50% in early 2023.
- Silver Price Prediction: If it breaks above the 20-day EMA, it could open the way to $19.00.
Silver prices fall below the 100-day EMA, falling for four straight days on a risk impulse triggered by expectations from the US central bank for further tightening as tensions arise between the embargo American-Chinese on chips and the escalation of the Russian-Ukrainian War. Therefore, traders looking for security kept the greenback in the driver’s seat. As of this writing, XAG/USD is trading at $19.59 per troy ounce, down 2.50%.
US stocks closed in the red, extending their losses for the fourth straight day. The lack of U.S. economic data released on Monday is forcing market participants to rely on Federal Reserve speeches led by Vice Chairman Lael Brainard and Chicago Fed Chairman Charles Evans.
Brainard said that while the U.S. economy has slowed “more than expected,” she added that some sectors are still lagging behind the effects of monetary policy. She noted that monetary policy needs to be tight for some time to provide reassurance that inflation will return below the Fed’s target.
Earlier, Charles Evans said the US central bank may be able to slow inflation “while avoiding a recession”. He estimates that the federal funds rate (FFR) will peak at around 4.5% in early 2023 and stay higher for longer.
Meanwhile, the greenback appreciated during the day on the escalating Russia/Ukraine conflict, as seen by the US Dollar Index, up 0.35% to 113.145. In addition, the US semiconductor embargo on China is expected to prompt retaliation from one of Asia’s largest economies.
It should be noted that the US bond market is closed, although that was no excuse for precious metals to start the week off on the wrong foot. However, the yield on 10-year US bonds is 3.961%, while 10-year US Treasury Inflation Protected Securities (TIPS) would open on Tuesday, yielding 1.62%.
That said, most traders expect US inflation data to be released on Thursday. Expectations on the monthly reading are at 0.2%, above the previous reading, while on a yearly basis they are at 8.1%, due to lower energy prices. On core inflation, which strips food and energy, the MoM is expected to slow 0.4%, less than in August, while year-on-year is expected to jump 6.5%, above the 6 .3% of the previous month.
Silver Price Prediction
XAG/USD fell below the 100-day EMA at $19.95, extending its losses, near the 20-day EMA at $19.53. It should be noted that the Relative Strength Index (RSI) is approaching the midline of 50, which when broken lower would signal that sellers are gaining momentum. Then the first XAG/USD support would be the previously mentioned 20-day EMA, followed by the 50-day EMA at $19.40, which once cleared could open the door for a retest of the daily low. from September 28 at $17.97. .