FUNDAMENTAL
OVERVIEW
Silver has now erased all
the gains since the start of US-Iran ceasefire as the current stalemate is
keeping the hawkish Fed worries alive.
In fact, despite lower real
yields, looser financial conditions and a weaker US dollar, the hawkish Fed
bias has been the main culprit capping the bullish momentum in precious metals.
This is unlikely to change
anytime soon as even if the US-Iran war officially ends and the Strait of
Hormuz is reopened, the increase in economic activity might keep inflation
higher for longer and force the Fed to hold rates steady.
Nonetheless, the reopening
of the Strait should give the market a boost in the short-term as it would ease
some inflation worries and bring back rate cut expectations. After that though,
traders will be focused on economic data and the Fed’s stance.
Tomorrow, we have the FOMC
policy decision and although the Fed is expected to keep everything unchanged
amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to
resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t
bring much volatility, but a more hawkish one could add more pressure on silver.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silver extended the losses after the price fell back below the key
78.00 level. The natural target for the sellers should be the major upward
trendline around the 67.00 handle. If the price gets there, we can expect the
buyers to step in with a defined risk below the trendline to position for a
rally back into the 78.00 level. The sellers, on the other hand, will look for
a break to extend the drop into the next trendline around the 55.00 handle.
SILVER TECHNICAL ANALYSIS –
4 HOUR TIMEFRAME
On the 4 hour chart, we
have a key swing level at 72.60. This is where we can expect the buyers to step
in with a defined risk below the level to position for a rally into new highs.
The sellers, on the other hand, will look for a break to increase the bearish
bets into new lows.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, we have
a minor downward trendline defining the drop into the 72.60 level. If the price
breaks above it, we can expect the buyers to increase the bullish bets into the
next trendline around the 75.00 handle. The sellers, on the other hand, will
wait for the pullback into the 75.00 handle to position for a drop into new
lows. Tomorrow, we have the FOMC
policy decision. On Thursday, we get the US Q1 GDP, the US Employment Cost
Index and the latest US Jobless Claims figures
