Silver prices decline following gold at the beginning of the week. The main reason for this movement is an additional oil output cut by the OPEC+ alliance. This stimulates an increase in oil prices, which is a trigger for rising global inflation. In this case, the key rates will be kept higher than previously expected. The same as gold, silver will be revised to lower levels if monetary policy tightens.
The regulator continues to push hawkish policy. After the oil’s rise, central bank rhetoric is likely to become tougher. However, it requires confirmation of the sustained growth in oil.
Wells Fargo analysts still expect the Fed’s 25-basis-point rate hike at the monetary policy meeting in May. The Fed has a lot of work to do to bring inflation back to its target level of 2%.
Per capita spending over the past three months still exceeds the target by 4.9% year-on-year. Fresh inflation data showed a slight decline. Analysts estimated it as a sign of moving in the right direction. However, inflation remains higher than the target, and it continues to aggravate the situation ahead of the Fed meeting.
As a rule, rising U.S. interest rates strengthen the American currency and put pressure on precious metal markets.
According to the technical analysis, silver continues to trade within a wide rectangle of $23–24.5. Now the prices are closer to the upper boundary of the figure. In combination with the fundamental negativity it gives a chance to open long positions.
The downside target will be the lower boundary of the rectangle. Since this boundary is wide and previously there were false breaks through the levels, we place the Fibonacci grid on the size of the increase in prices from the low. The 0.236 Fibonacci level is exactly at the figure’s boundary, and it will be the downside target. It is equivalent to the price of $23.01. Stop-loss will be set when attempting to break above the rectangle and reach the local high at $24.63.
Silver prices are likely to decline:
Take profit — 23.01
Stop-loss — 24.63
This content is for informational purposes only and is not intended to be investing advice.