Silver to keep declining ahead of central bank meetings

14 September 2023 137
Silver to keep declining ahead of central bank meetings

The silver price has been in a flat range since early summer. Now there is a downward movement driven by the rising dollar index and high yields on U.S. government bonds. Today the ECB meeting is scheduled, at which most likely the rate will be raised again. This will be negatively perceived by the precious metals market as some economists expect the rate to remain at the same level.

Next week the price volatility will increase as traders will await decisions on interest rates from regulators of the United States, Sweden, Switzerland, Norway, Great Britain, and Japan.

The meetings of the Federal Reserve, Bank of England, and Bank of Japan are of the most interest for the precious metals market.

Ahead of the Fed meeting, many policymakers suggest there is no need for interest rate hikes. However, very few of them are talking about a solid win over inflation. Yesterday's price growth data confirms these statements.

The core Consumer Price Index, excluding food and energy costs, rose by 0.3% year-on-year in July. This was the first increase in dynamics over six months. It should be reminded that this indicator is the most important for the Fed in determining its monetary policy.

Nevertheless, analysts expect the rate to remain at the current level of 5.25% in the next central bank meeting. This will be a positive signal for the metals. However, in the light of recent inflation data, the regulator may again give hawkish comments. Investors will lay this risk in silver prices in the coming trading days.

Decisions on interest rates of Japanese and UK regulators will not cause any surprise. The Asian country will keep its borrowing level unchanged, while the Bank of England is likely to raise it by 0.25%.

But both regulators may tighten their policy comments as inflation in the countries is well above the interest rates and central banks' target.

According to the technical analysis, the silver price broke down from the rectangle yesterday. The downward movement may continue in the next few days. The downside target may be the medium-term trend limit, which corresponds to the price of $22.2. A Stop-loss will be set when prices move up inside the rectangle to the round level of $23.

Silver prices are likely to decline:

Take profit – 22.2

Stop-loss – 23.0

This content is for informational purposes only and is not intended to be investing advice.

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