Yesterday silver showed increased volatility due to the news of JPMorgan Chase's purchase of First Republic Bank's assets. JPMorgan Chase CEO Jamie Dimon announced that the company is buying most of the assets from struggling First Republic Bank to prevent its bankruptcy. On this background, silver rose by 4%. However, the rise was short-lived, and in the next few hours the metal returned to its original price.
This Wednesday, the Federal Reserve System (Fed) is preparing to raise its benchmark interest rate for the tenth time. This is expected to be the latest step in its year-long effort to control inflation at its fastest rate in the past four decades. Investors are making different assumptions about Powell's speech. One of them is that the Fed will finally stop raising rates. According to other suggestions, the pause will be announced in case the inflation rate remains stable above 2%.
Traders are expecting a rate hike, but regulator statements regarding future plans may be surprising.
Core inflation in the Eurozone fell for the first time in 10 months, supporting the possibility of softening the rhetoric of the European regulator. Consumer prices excluding the cost of fuel and food rose by 5.6% year-on-year. Inflation showed a slowdown from a record 5.7% increase in March. It was in line with the average estimate in a Bloomberg survey of economists. The ECB should raise the cost of lending on Thursday. However, comments from the central bank representatives will be important too. Currently, the ECB is focusing on the core inflation indicator as a key factor in its decision-making.
These statistics are extremely positive for precious metals.
According to technical analysis, silver is trading in a sideways range along with gold. At the moment the price is on its lower boundary. It is possible to open long positions, expecting the recovery of silver before the Fed meeting tomorrow. The level of $25.1 will be the upside target. It is near the top of the rectangle. Yesterday's false-break was not considered, as the price quickly rolled back down. Stop-loss can be set when the price decreases under the lower boundary, which corresponds to the price of $24.5.
Rise in the price for silver:
Take profit – 25.1
Stop-loss – 24.5
This content is for informational purposes only and is not intended to be investing advice.