Silver Price Analysis: XAG/USD remains inside the woods above $22.20
NEW YORK (March 21) Silver price (XAG/USD) has rebounded firmly from $22.20 in the early Asian session. The white metal has been consolidating in a range of $22.20-22.70 for the past three trading sessions. The asset is expected to remain inside the woods ahead as pre-Federal Reserve (Fed) anxiety could come into play despite the odds favoring a consecutive 25 basis point (bp) rate hike to 4.75-5.00%.
Fed chair Jerome Powell couldn’t take risk of a revival in the inflationary pressures, therefore, the central bank would continue its policy-tightening spell to keep weighing on the Consumer Price Index (CPI). Analysts at Swedbank are sticking with their call that the Fed will hike rates by 25 bps both this week and at its May meeting. They further added, the Fed will, however, face a difficult balancing act between on the one hand being ready to support the financial sector, while also signaling further tightening is on the cards to tame inflation.
Commenting on the risk impulse, a two-day winning spell by S&P500 indicates that investors’ risk appetite is solid now, however, caution prevails as fears of a banking sector meltdown are not faded yet. The US Dollar Index (DXY) is juggling near 103.20 after failing to extend its recovery above 103.50. A sheer volatility would be visible in the USD Index if Fed decides to take an unchanged stance on interest rates as it is more versed in the situation of the banking sector.
Silver technical forecast
Silver price is demonstrating a sideways auction in the 50-pip range for the past two sessions on an hourly scale. The white metal is showing signs of weakness in the upside momentum, which indicates that a corrective move is on cards. The asset is putting efforts into keeping itself above the 20-period Exponential Moving Average (EMA) at $22.40.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which indicates that investors are awaiting a new trigger for further action.
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