Silver Price dropped drastically yesterday and witnessed its biggest single-day fall in one month. Prices tested their four-week low following the hawkish Federal Reserve (Fed) comments amid upbeat United States (US) data.
Hawkish comments from the Fed Officials, Fed governor and Vice Chair Nominee Philip Jefferson said. “I remain focused on returning it to our 2% target.” On the same line, Federal Reserve Governor Lisa Cook said “I am committed to promoting sustained economic growth in a context of low and stable inflation,”. In her statement to be given before the Senate on Wednesday. Further, Fed Board nominee Adriana Kugler also mentioned, per the prepared statements for Wednesday’s testimony. That returning inflation to the central bank’s 2% target is key to setting a strong foundation for the US economy.
U.S. single-family housing starts jumped 21.7% in May from the prior month. Its the highest in more than a year, and permits issued for future construction also climbed, indicating that the housing market may be turning a corner, which also added selling pressure.
Housing Starts jumped to the highest level since April 2022 by rising 21.7% MoM in May versus -2.9% (revised from +2.2%) recorded in April and -0.8% market forecasts. On the same line. Building Permits were also upbeat for the said month, up 5.2% MoM versus -5.0% expected and -1.4% previous readings (revised from -1.5%).
Now, Federal Reserve Chair Jerome Powell is set to testify before Congress later in the day. Potentially offering more cues on the path of monetary policy. And interest rates after mixed signals from the Fed last week. This will have a significant impact on the prices.
Technical Outlook
Silver prices witnessed more than 2.80% fall yesterday. It’s the biggest intraday fall since 11 May 2023. Prices turned lower from the day’s high of 72630 and dropped to the day’s low of 70181.00 before closing at 70387.00
On the above chart, Silver prices form a typical Head and Shoulder pattern. Yesterday it broke the neckline support. Which is indicating further correction. Adding to this, RSI 14 and its 9 SMA also support the downward momentum. Prices appear to drop towards 69950-69400-69000 very soon.
On the upside, immediate resistance is seen at 71350-72250.00.
Traders may take a short position with immediate stop loss above 71350 for the above target.