Silver Price Outlook – Silver Drops Ahead of FOMC

Silver Technical Analysis

The silver market has fallen pretty significantly during the trading session here on Wednesday, heading into the FOMC interest rate decision and of course, the statement. At this point, people are expected to see a 25 basis points interest rate cut. That interest rate cut has already been priced into the market, and in and of itself shouldn’t cause much of a stir. But having said that, you have to keep in mind that there are questions about what we’re going to do going forward.

If the Federal Reserve sounds extraordinarily hawkish, that could freak the market out a bit and cause the U.S. dollar to strengthen against everything, which normally has a bit of a negative correlation against silver as well. So, with all of that, I think you have to keep in mind that there is the possibility of a bit of a shock.

The markets believe that there are three quarter point cuts coming over the next couple of months. And if it gets anything less than that, you could see the US dollar get a little bit of a bid in the short term. Ultimately though, I think silver is in an uptrend for a reason, and I don’t think that ended overnight. The $40 level is the hard floor in the market from everything I see. And ultimately, I do think that it will hold, especially with the 50-day EMA racing toward it.

If we break down below the $40 level, then I start to think that maybe something has changed, but at this juncture, I think we’re pretty far from there and I’m not overly concerned about it. At this point, I’m looking for some type of bounce that I can start buying into.

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