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Silver Prices Slide Ahead of FOMC Minutes

Silver Prices Slide Ahead of FOMC Minutes

Alejandro Zambrano, Market Analyst

Talking Points

  • Silver prices are lower, following an increase in demand for the Dollar post higher expectations that the Fed is going to hike rates.
  • Technically, silver prices remain trapped in the $16.78 – $17.56 range, which is both the April 25 low and May 11 high respectively.
  • The nearest support level below the lower end of the above-mentioned range is the psychological level of $16.50, while the resistance level above the May 11 high of $17.56 is the May 5 high of $17.70.
  • Today, the Federal Reserve will publish its minutes from the most recent FOMC Meeting.

Silver prices declined over the last 24 hours as expectations of a Fed rate hike in 2016 increased, following U.S. headline inflation reaching an annual rate of 1.1% from 0.9%, and Industrial Production increasing by 0.7% MoM from -0.6% prior. Expectations of rate hikes were further bolstered as one Fed member suggested a rate hike may occur in June or July, whilst two others said that they would expect up to three rate increases this year. Today, further hints of rate hikes or not, may be revealed, as the Federal Reserve will publish minutes from its most recent FOMC Meeting. According to overnight-index swaps, the market is now pricing in 32 bps worth of rate hikes over the next 12 months and this gives it a 17.7% likelihood of a rate hike on June 15, the corresponding figure using the Fed Funds Futures being 12%.

Technically, silver prices remain trapped in the $16.78 – $17.56 range, which are the April 25 low and May 11 high respectively. As long as price remains trapped in the above-mentioned range there will be no clear price trend and a break to this level may be needed for a trend to form.

Support levels below the lower end of the range are the psychological level of $16.50, followed by the March 18 high of $16.30. Resistance levels above the May 11 high of $17.56 are the May 5 high of $17.70, followed by the May monthly high of $17.99.

Our forecasts for Q2 2016 are live on the site. Download them for free.

Silver Price | CFD: XAG/USD

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Contact and follow Alejandro on Twitter: @AlexFX00

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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