The silver price clawed back some of its losses on the aftermath of the FOMC minutes, but silver remains in a downward trend below the November 16 high of $14.44, and I still expect the price of silver to reach its yearly low of $13.95. But the momentum of the downtrend has moderated slightly following the FOMC minutes.
Silver Bulls Under Pressure as FOMC Minutes Still Point Towards A Rate Hike
Yesterday evening’s FOMC minutes did little to change the outlook for a Fed rate hike in December. It did, however, highlight that further rate hikes will be data dependent. This could explain the bounce we saw in silver prices. The key variable to keep an eye on is headline PCE inflation, as it’s the only variable which the Fed is expected to change a great deal over the next year. I would surmise that the Fed funds rate will be raised in line with higher inflation readings.
FED Projections September, 2015
Source: www.federalreserve.gov
On Tap: Philadelphia Fed. Index and Jobless Claims
Data on tap in today’s session are Philadelphia Fed. index and jobless claims, but they should not alter the technical or macro theme in a major way. However, we can see a bit of a squeeze in silver prices if the data disappoints. Better than expected data readings may trigger a break to yesterday’s low of $14.02, subsequently triggering more short orders and a large slide in silver prices as traders holding stops below the yearly low begin to exit their positions.
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
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