An anticipation of rate hike fear continued holding dollar index and bond yield at top levels, which resulted in selling pressure in white metals since the start of the week. The currency sparked near 10-month high levels while benchmark 10-year Treasury yields ascended a fresh 16-year peak.

White metal faces selling pressure, since the US dollar and bond are continuing trading in the upside direction. The US Dollar Index, a measure of the value of the USD relative to a basket of foreign currencies, jumped above 106.29 the highest level since November.

The Federal Reserve last week delivered a more hawkish tone, which built up prospects for further policy tightening. Further, the recent comments by several Fed officials reaffirm expectations for at least one more rate hike by the end of this year. This remains supportive of elevated US Treasury bond yields, which underpin the greenback. Adding to this, European economies are struggling to bear the consequences of higher interest rates by the European Central Bank (ECB) while the Chinese economy is facing deflation risks.

Data released from the United States yesterday, indicated that the Conference Board’s Consumer Confidence Index fell to a four-month low in September. This fueled concerns that the consumers are feeling the pressure from the persistent high inflation and rising interest rates. On the other hand, worries about a real estate crisis in China – the world’s second-largest economy also weighed on the sentiment.

Meanwhile, US New Home Sales demand dropped to 675K vs. expectations of 700K and the former release of 714K. The demand for new homes dropped due to higher borrowing costs.

Now, focus will shift on personal consumption expenditures, the Federal Reserve’s preferred inflation gauge, which is due on Friday.

Technical Outlook

SILVER prices turned lower from the start of the week. Prices retreated by 2.90%, from the peak of 73636 to earlier low of 71125.00. Prices traded at 71139, down 0.88%.

On the above chart, formation of long bearish candlestick is indicating more weakness likely to emerge in days to come. Further, prices trading below is 20 and 10 DMA and RSI also giving an negative crossover, both which are supporting downside momentum

On the downside, crucial support is seen at 71080 and a break below will extend fall. Prices may drop towards 70500-69900 levels in near future. Alternatively, any rise towards 71600-71700 will attract selling pressure.

On the upside, massive resistance is seen at 72250 and closing above only changes the direction. And prices may retest next resistance 72800-73600.0

Overall trend may remain weak following the strong dollar and global jitters.