Gold prices edged higher in early Asian trade on Monday, helped by a weaker U.S. dollar and other fundamentals. Although chances of more interest rate hikes by the Federal Reserve this year weigh on bullion’s appeal.
In his congressional testimony last week, Fed Chair Jerome Powell signaled more rate hikes ahead but vowed the central bank would proceed with caution. Some other Fed members supported the chairman's statement.
Investors now expect a 72% chance of a rate hike in July, with rate cuts seen from 2024 onwards.
Moreover, U.S. business activity fell to a three-month low in June as services growth eased for the first time this year, yet economic growth ticked up a notch in the second quarter.
Central bankers are concerned about the persistence of high inflation. One of the reasons for rising prices is that people adjust their behavior to high inflation because of its long-lasting effects on the economy. This particularly affects the link between higher prices and rising wages. In the current situation, governments are introducing new monetary measures. For example, central banks in Australia and Canada raised interest rates earlier this month. UK, Swiss, Norwegian and Turkish regulators raised interest rates on Thursday.
Global rate hike and worsening outlooks are negatively affecting precious metals prices.
The H4 time frame shows silver moving in a downtrend. The price is rebounding from the seven-week trend resistance.
In terms of wave analysis, the price is forming a third descending wave. It has already broken through the top of the first wave at the level of 22.70. The downward movement may intensify in the near term.
Short-term prospects for silver suggest selling.
The target is at the level of 21.25.
Part of the profit should be taken near the level of 22.20.
A stop-loss could be placed near the level of 23.70.
The bearish trend is short-term, so trade volume should not exceed 2% of your balance.