Silver prices posted more than 8.92% gain last week. That was the biggest weekly gain since 28 November 2022. Growing fears of a U.S. and European banking collapse spurred heavy flows into bullions prices. Further, weakness in the dollar amid bets that the Fed will lack the economic headroom to keep raising rates also added in recent gain.
Now Silver prices retreated slightly amid some profit booking ahead of Federal Reserve interest rate decision,due later today. While caution over a potential banking crisis kept safe haven demand strong.
A brewing bank crisis saw markets largely reassess their expectations for whether the central bank will tighten policy further, given that a sharp rise in interest rates applied much pressure on the banking system. A minority of traders expect the Fed to hold rates on Wednesday.
But given that U.S. inflation is still trending well above the Fed’s target range, the bank may yet raise interest rates further.
Bullion prices were nursing sharp losses from the prior session, as government intervention helped calm fears over a looming crisis in the U.S. and European banking system. This in turn saw markets dump gold at one-year highs, given that the yellow metal’s recent rally was largely driven by safe haven demand.
Fed meeting decision will come at 11.30pm, later today. With the bank widely expected to hike interest rates by 25 basis points (bps) – a smaller figure than previous expectations of a 50 bps hike. And it’s expected that, any hint of pause or a slower rate hike decision will change the sentiment for bullions prices
Technical View
MCX Silver prices witnessed a speculative jump last week, gaining more than 8.90%. Silver futures bounced from the low 63348 and made a high of 69550. And currently it is trading at 68574, up 0.24%. SILVER Future witnessed an abrupt bullish rally as after the dollar weakened against its major counterpart amid baking collapse fear.
Technical View- A long bullish candlestick on weekly chart is still indicating strong bullish momentum in near future. Further, MACD also indicates upside momentum.
Adding to this, Fibonacci retracement drawn on the above chart, is indicating an upside projection of 70000-71000 in near future.
It’s expected that, after an abrupt bullish rally SILVER prices may take correction. And any short term dip is expect to attract near term buying activities again. Hence, buy on dips towards 67300-67500 levels is expected. With stop loss below 65980.00
On the downside, a break below 65500 only sentiment will change. And silver prices may test next support 64000-63300. Fed and BOE meeting decision will bring volatile momentum for the bullion prices