MCX Silver, Silver Price, Silver News, Chandi Bhav, Silver Price latest News: MCX Silver futures experienced a significant decline on Tuesday, falling below the 70,000 level for the first time in the previous three months, showcasing a volatile trend. Despite the expected support in normal circumstances, concerns over interest rate hikes played a key role in the downward movement.
On Wednesday, MCX Silver futures settled at 69,247, marking a decrease of 1.62%, driven by apprehensions regarding rate hikes. Federal Reserve Chair Jerome Powell, while testifying before the House Financial Services Committee, reiterated the central bank’s intention to raise rates as a measure to curb inflation.
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Surprisingly, the weakening dollar prevented further decline in bullion prices, with the dollar index dropping to 102.12, a decrease of more than 0.4%.
Powell emphasized, “Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” highlighting the potential for future rate hikes.
The Federal Reserve, despite maintaining rates unchanged last week, signaled its plan to resume rate increases later in the year, forecasting a rate of 5.6% by the end of 2023. If the central bank follows its recent quarter-point increment pattern, the forecast suggests two more rate hikes this year.
The projections for additional rate hikes coincide with Powell’s acknowledgment of continued high inflation pressures, adding that achieving the Fed’s 2% inflation target still has a long way to go.
CME Group’s FedWatch Tool currently indicates a 76.9% probability of a quarter-point rate hike in the upcoming meeting scheduled for late July.
Kedia Advisory, a renowned market analyst, provides a technical view on silver, highlighting potential support areas and trading opportunities. The 200-Day EMA, the 50% Fibonacci level, and an established support area are considered crucial for determining the market’s direction.
This situation is viewed as an opportunity to seek value, particularly due to the significance of the widely followed 200-Day EMA. The market is expected to exhibit back-and-forth trading, indicating potential buying opportunities during dips.
According to Kedia Advisory ‘however, if the price breaks below and maintains the $22.40 level, further downward movement towards the 61.8% Fibonacci retracement level around $22.25 is likely, and a deeper correction towards $20 cannot be ruled out.’
While the support area historically attracts many buyers, the silver market’s volatility should be taken into account. Position sizing becomes critical due to this volatility, and excessive exposure is deemed risky.
Kedia Advisory suggests that ‘a break above the $23.60 level could propel the price towards $25, a former support level. Traders should closely monitor the US Dollar Index and the usage of precious metals for wealth preservation, as these factors can influence the silver market.’
In the first four months of 2023, silver production from Peru recorded a 7% year-over-year decline. This decrease in production has raised concerns among market players about a potential shortage, especially as the demand for silver intensifies due to the growing adoption of renewable energy sources, such as solar panels and electric vehicles.