- The white metal extends its slide to four days in a row.
- Fed’s hawkish expectations weighed on silver, and any “dovish” signal could be viewed as an opportunity for XAG bulls.
- XAG/USD is downward biased, though upside risks remain due to the 200-DMA closing the spot price.
Silver (XAG/USD) slides for the fourth consecutive day, mainly attributed to monetary policy tightening expectations of the US central bank. At the time of writing, XAG/USD is trading at $23.79, down some 0.21%.
The market sentiment is upbeat, as portrayed by US equities trading higher. That alongside Fed policymakers signaling three rate hikes in 2022, amid the possibility of a fourth one, keep precious metals under pressure. At the same time, gold is plunging close to 1%, sitting at $1831,75, after reaching a daily high around $1,850, a $20 drop ahead of the release of the Fed monetary policy statement.
In the meantime, the US 10-year Treasury yield advances 0.5 basis points up to 1.783%, underpinning the greenback. The US Dollar Index, a gauge of the greenback’s performance against a basket of six peers, advances 0.18% sits at 96.118.
The consensus among some analysts cited by Bloomberg expects that Fed’s Chairman Jerome Powell will lay the groundwork for a March 2022 rate hike, at the same month that the Quantitative Easing (QE) ends. What keeps market participants nervous, as witnessed by the recent fall of the S&P close to 10%, is the Quantitative Tightening (QT) speed and when it will begin. Some investors expect it to kick in by the beginning of the second half of the year, others by the end, while the minority expects it to begin by June.
XAG/USD Price Forecast: Technical outlook
The non-yielding metal sits near the 50% Fibonacci retracement drawn from the last pivot low at $22.81 to the highest of the year at $24.70. Earlier in the session, it reached below of it, near the 61.8% Fibo level at $23.53, though it bounced back immediately.
Despite the aforementioned, silver is downward biased. On January 20, it faced strong resistance at the confluence of a downslope trendline and the 200-day moving average (DMA) around $24.70, but it was unable to break it, dropping $1.00 since then.
On the downside, the first support would be the 61.8% Fibo retracement at $23.53. A break under that level would open the door to the 78.6% Fibo level at $23.21 and then the January 18 cycle low at $22.82.
To the upside, the first resistance is the 38.2% Fibonacci retracement level at $23.98, unsuccessfully broken one time. The next supply zone would be the January 24 daily high at $24.31, followed by the abovementioned 200-DMA at $24.60.