Silver Price Prediction – Prices Drop on Dollar Rally

Silver prices moved lower but continued to trade sideways. The dollar rose despite a downtick in U.S. Treasury yields. This price action comes ahead of Wednesday’s decision by the Federal Reserve on Interest Rates. Expectations are the Fed will announce the tapering of its bond purchase program. Market participants also believe that the Fed will begin to start to raise interest rates as early as July.

Silver prices dropped sharply but held support near the 50-day moving average at 23.39. Resistance is seen near the 10-day moving average at 24.12. Short-term momentum turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs when the 12-day moving average minus the 26-day moving average crosses below the MACD signal line (the 9-day moving average of the MACD line).

The Fed is Poised to Lift Bond Purchase Program

The Federal Reserve started its 2-day meeting and is expected to reduce its bond purchase program when it announces its monetary policy on Wednesday. A CNBC survey showed that respondents to the survey overwhelmingly forecast that the Fed will announce a decision to reduce its monthly asset purchases in the statement Wednesday and begin tapering in November. Respondents also moved their forecast for the first-rate hike to September 2022 from December in the last survey