Silver Prices Drop on Dollar Strength After Hawkish Fed Announcement

Silver prices moved lower on Wednesday in light of the Fed’s hawkish stance on interest rates. Markets are pricing in that the Fed will raise rates by 25 basis points in March with three subsequent quarter-point hikes throughout 2022. US stocks fell after coming off highs, while US treasury yields rose. The 10-year rose nearly 7 basis points to 1.85% following the decision. The US dollar strengthened against other currencies after the Fed decision. Gold prices moved lower by 1%.

Technical Analysis

On Tuesday, silver prices fell below the 10-day moving average after the Fed decision, breaking its former support level. Long-term resistance is seen near the 200-day moving average at 24.60. Short-term momentum is negative as the fast stochastic is printing a reading of 55. Medium-term momentum remains positive as MACD (moving average convergence divergence) index crossover indicates a buy signal. However, the MACD line (the 12-day moving average minus the 26-day moving average) is decelerating and converging to the MACD signal line (the 9-day moving average of the MACD line), as momentum might turn negative.

Despite Higher Rate Home Sales Rise

US new-home sales increased by 12% to 811,000 in December, compared to 762,000 in all of 2021. The surge in new-home sales indicates that there is increased demand for new homes. Homebuilders are experiencing more opportunities to sell properties. Home sales will likely continue to see a near-term boost as people try to get ahead of rising mortgage rates prior to Fed rate hikes.