Key Takeaways:
- Silver price falls to $30.30 amid a strong US Dollar.
- Investors are awaiting the preliminary US S&P Global PMI report for June.
- The Fed is expected to cut interest rates twice this year.
Silver Price Decline and Market Factors
Silver price (XAG/USD) has experienced a significant drop to nearly $30.30 in the recent American session. This decline is attributed to the strength of the US Dollar (USD) as investors eagerly anticipate the release of the preliminary United States (US) S&P PMI data for June, scheduled for 13:45 GMT.
The US Dollar Index (DXY) has reached a six-week high at around 105.90 due to disappointing global PMI figures, leading to negative market sentiment. The USD Index could face additional pressure if the upcoming US PMI data fails to meet expectations.
Expectations Regarding Federal Reserve Actions
Analysts anticipate a slowdown in both Manufacturing and Services activity in the US based on the projected PMI report. Despite the current market conditions, the overall appeal of Silver price remains positive as investors anticipate the Federal Reserve’s plan to initiate interest rate cuts starting from the September meeting. Market forecasts suggest that the Fed will implement two rate reductions this year, as opposed to the one initially indicated by policymakers in their latest interest rate projections report.
The decision to cut rates twice in 2019 stems from weak US inflation data and slower-than-expected growth in Retail Sales during May. Addressing the inflation concerns, Minneapolis Fed Bank President Neel Kashkari stated that inflation is likely to align with the bank’s 2% target within the next two years, although wage growth remains a significant area of concern.
Silver Technical Analysis
Silver price has rebounded after encountering buying interest near the lower boundary of the Rising Channel chart pattern observed on a daily timeframe. The white metal has surpassed the 20-day Exponential Moving Average (EMA) around $29.90, indicating a shift towards a bullish trend in the short term.
The 14-period Relative Strength Index (RSI) is currently fluctuating in the 40.00-60.00 range, reflecting investor indecision about the market direction.
Silver Daily Chart
FAQs:
1. Why did the Silver price decline to $30.30?
The decline in Silver price was influenced by the strength of the US Dollar and anticipation surrounding the release of the preliminary US S&P Global PMI report for June.
2. What are investors expecting from the Federal Reserve?
Investors are anticipating that the Fed will cut interest rates twice this year, starting from the September meeting, due to concerns about weak US inflation and slow Retail Sales growth.
3. What technical indicators suggest a bullish trend for Silver?
The rebound in Silver price, exceeding the 20-day EMA, and the Relative Strength Index oscillating within a certain range indicate a positive shift towards a bullish trend in the short term.
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