Silver Price Forecast: XAG/USD Declines Toward $22.70 as Fed Delays Rate Cuts

Silver prices are experiencing a decline, reaching a weekly low near $22.70 as the Federal Reserve (Fed) adopts a neutral stance on interest rates for the March meeting. While the Fed kept interest rates steady, it deferred any speculation on rate cuts until it gains greater confidence in inflation returning to the 2% target.

Equities and risk-related currencies are responding differently, with S&P500 futures showing positivity, and the latter facing challenges due to the uncertainty surrounding the timing of rate cuts, as indicated by Fed Chair Jerome Powell. The US Dollar Index (DXY) continues its rally, nearing 103.80, reflecting the Fed’s reluctance to discuss rate cuts until inflation stabilizes at 2%.

Investors are now turning their attention to the Institute of Supply Management (ISM) Manufacturing PMI for December, set to be released at 15:00 GMT. The consensus anticipates a drop in Manufacturing PMI to 47.0 compared to the previous reading of 47.4.

Looking ahead, market participants are eagerly awaiting the Nonfarm Payrolls (NFP) data for January, scheduled for release on Friday. The recently released ADP Employment Change data has set a subdued tone, with expectations of 180K job additions, significantly lower than the previous 216K. The Unemployment Rate is also expected to rise to 3.8%, up from December’s 3.7%.

Technical analysis shows that silver prices have formed an Evening Star candlestick pattern on the daily timeframe, signaling a bearish reversal. The asset struggled to maintain levels above the 20-day Exponential Moving Average (EMA) at around $23.00. The 14-period Relative Strength Index (RSI) indicates a sideways trend in the 40.00-60.00 range.”

Silver daily chart

XAG/USD