Silver Prices Edge Higher in the Wake of Fed’s Approval of Rate Hike

Key Insights

• Silver prices edged higher after the FOMC Meeting 
• The Dollar rallied after the announcement 
• U.S. Benchmark Treasury yields rose following the rate hike
• Gold prices decline amid Russia-Ukraine talks

Silver prices remained little changed on Wednesday following the Fed’s approval for its first rate hike since 2019. The U.S. 10 year yield jumped eight basis points, reaching a new high since 2019, before falling slightly. Gold prices declined after the meeting as its safe-haven appeal declined. U.S. stocks rose while oil prices tumbled on Russia-Ukraine talks. 

At the FOMC Meeting, the Federal Reserve approved its first interest rate hike in over three years. The rate hike will bring the benchmark rate up to 0.25%-0.5%. The FOMC penciled in rate hikes at the following six meetings for the year and hinted at more in 2023. The fed funds rate is by year’s end.

Technical Analysis

Silver prices moved lower for the third consecutive trading session. The pattern could be a consolidation pattern that refreshes lower. De-escalated tensions will reduce demand and lower costs. The risk is to the downside. Support is near the 200-day moving average of 24.065. Resistance is now former support is near the 10-day moving average that comes in near $25.54. Short-term momentum is negative as the fast stochastic had a crossover sell signal but is converging.

The medium-term momentum is negative as the histogram prints negatively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in negative territory, which reflects the downward trend in price movement.