Silver price: what to expect with Fed interest rate decision in focus
(July 26) Silver price is range-bound ahead of Fed meeting later in the week. It remains below the crucial level of 25.50 while getting a boost from the declining Treasury yields.
Fed interest rate decision
Investors looking to invest in silver and other precious metals have their eyes focused on the Fed interest rate decision. The event, which is scheduled for Wednesday afternoon, will avail further clues on the timing of the expected tapering of bond purchases and the overall tightening of its policy. A dovish tone will likely exert pressure on the US dollar while acting as a bullish catalyst for silver price.
US bond yields
The declining Treasury yields have boosted silver price. As at 08.13 UTC, the benchmark 10-year Treasury yields were down by 3.76% at 1.23. Its current level is a drop from Friday’s high of 1.31, which equates to a decline of 6.40%. Notably, the 5 and 30-year US bond yields are also down by 2.08% and 1.00% respectively.
After hitting the year’s high at 1.77 in late March, the 10-year Treasury yields have been on a prolonged downtrend. During that timeframe, it has dropped by about 31.15%. Low yields tend to offer support to precious metals. Between late March and early June, the downtrend in Treasury yields boosted silver price by about 20.59%. In the ensuing sessions, a rebound in the 10-year US bond yields will exert pressure on the precious metal.
Silver price technical outlook
Silver price is still trading below the crucial resistance level of 25.50 as has been the case since early last week. For a week now, it has been within a rather tight range of between 25.00 and 25.47. At the time of writing, it was up by 0.37% at 25.26. On a two-hour chart, it is trading between the 25 and 50-day exponential moving averages.
In the near term, the precious metal is likely to remain within the horizontal channel. If the bulls manage to push the price past the channel’s upper border of 25.47, they’ll have cleared the path to 25.50. Subsequently, the next target will probably be at 25.71. On the flip side, a move below the channel’s lower border at the psychological level of 25.00 will have the bears eyeing last week’s low of 24.75.
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