Silver is testing local lows over the past few months. Just like gold, silver will be affected by the US CPI report. The market needs strong data on inflation for the growth of precious metals. Most likely, the rate of inflation slowdown will decrease month by month. But the year-over-year indicator won’t be representative since the decline in annual inflation will occur due to the high base of last year.
According to economists polled by Bloomberg, a slowdown in inflation in the European Union (EU) will still keep it just above the European Central Bank's 2% target by 2025. The first survey of this year showed that inflation is projected at an average of 2.1% by 2025. Continued high inflation will harm commodities.
The CEO of JPMorgan Chase & Co., the largest US bank, warned against prematurely declaring a victory over inflation. He warned that the Federal Reserve (Fed) could raise interest rates above 5% if the high prices were sustainable.
The warning came after Federal Reserve officials said that according to the plan, a further hike of rates is expected. Market participants weren’t prepared for the fact that a strong January jobs report could push the Fed towards a more aggressive monetary policy.
JPMorgan also warns about the long-term impact of inflation on the markets.
According to technical analysis of the hour timeframe, the price of silver fell below the previous support level. Currently, there was a consolidation under this level, which opens up the possibility for further decline.
The daily timeframe also shows an opportunity for silver to accelerate its decline. The price was below the 200-day Moving Average, as well as below the 0.382 Fibonacci level. Thus, a target for gold to fall to the next 0.5 Fibonacci level is opened, and it corresponds to the price of $21.10. A stop-loss can be placed when leaving above the resistance level on the hourly timeframe, this is the level of $22.35.
Decrease in silver price:
Take profit – 21,10
Stop-loss – 22,35
This content is for informational purposes only and is not intended to be investing advice.