FUNDAMENTAL
OVERVIEW
Silver briefly
slipped below the key $63.00 support on the FOMC decision, but the move was
quickly reversed.
The Fed delivered
the widely expected 25 bps rate hike and projected one additional hike in 2026.
The central bank then sees rates remaining unchanged throughout 2027 before
resuming cuts in 2028.
Interestingly, the
initial market reaction was hawkish despite the Fed’s projections being less
aggressive than what markets had priced. The consensus ahead of the meeting was
for one additional hike in both 2026 and 2027. The Fed’s projection matched the
2026 expectation but showed no additional hike in 2027, while markets had been
pricing one hike in 2026 and two in 2027.
In other words,
the Fed’s projected path was actually less hawkish than the market had
anticipated. Fed Chair Warsh was also perceived as more hawkish than expected,
although his comments largely reiterated the message from his Jackson Hole
speech, with only limited adjustments following the rate hike.
Once the initial
reaction faded, markets reversed course and silver started its rally. A more
detailed breakdown of the Fed decision is available here.
Looking ahead, I would
carefully watch the situation in the Middle East as $100 oil, rate hikes and
elevated bond yields might put more pressure on Trump to end the war. We might
be already entering a de-escalation phase as Trump called a meeting with Gulf
leaders on Tuesday on the sidelines of the UN General Assembly in New York to
discuss the next steps in the war with Iran. Notably, the Iranian delegation
will be allowed to participate.
A de-escalation
would send oil prices lower, easing inflation and rate hikes concerns,
ultimately supporting silver.
Economic data will
be another key driver. When positioning and market expectations become
stretched, even a modest shift in the data can trigger a significant reversal.
If the US data starts surprising to the downside, expectations for aggressive
rate hikes will likely be reduced, giving silver additional boost.
SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that silver probed below the major 63.00 support but eventually rebounded
strongly and it’s now approaching the swing high around the 68.00 level. That’s
where we can expect the sellers to step in with a defined risk above the swing
level to position for a drop back into the 63.00 support. The buyers, on the
other hand, will look for a break to increase the bullish bets into the 71.50
level next.
SILVER TECHNICAL ANALYSIS –
4 HOUR TIMEFRAME
On the 4 hour chart, we can
see that the break of the trendline increased the momentum as more buyers piled
in to target new highs. The natural target should be the swing high around the
68.00 handle. Again, that’s where we can
expect the sellers to step in to position for a drop into the 63.00 support,
while the buyers will look for a break to extend the rally.
SILVER TECHNICAL ANALYSIS –
1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor upward trendline defining the bullish momentum. If we get a
pullback, we can expect the buyers to lean on the trendline with a defined risk
below it to keep pushing into new highs. The sellers, on the other hand, will
look for a break to pile in for a drop into the 63.00 support next. The red
lines define the average daily range for today.
UPCOMING CATALYSTS
On Tuesday, we have the Trump meeting with Gulf leaders and on
Wednesday we get the Flash US PMIs.
This article was written by Giuseppe Dellamotta at investinglive.com.