Silver Prices Rise after the Fed’s Rate Hike

Key Insights

• Silver prices rally as yields and Dollar weaken
• The Dollar moved lower as the market already priced in the Fed’s tightening
• U.S. Benchmark Treasury yields edged lower as investors digest rate hike
• Oil prices surge amid warning of Russian oil shut down and supply shortage

Silver prices moved higher on Thursday after the Fed approved a quarter-point rate hike in line with expectations. U.S. benchmark yields slightly declined as the market takes in the Fed rate hike. Gold prices saw gains as the U.S. dollar and yields eased and safe-haven demand is elevated due to geopolitical conflict.

Last week’s initial jobless claims decreased to 214,000 from 229,000 the previous week, dropping by 15,000. Expectations were 220,000. This week’s reading is a two-month low. The labor market reflects a decent recovery from the pandemic. The data shows that a strong labor market can withstand higher interest rates.

Technical Analysis

Silver prices increased following the Fed rate hike. The tightening of rates will continue to elevate silver prices as the Dollar and yields drop. The risk is to the upside. Support is near the 200-day moving average near 24.04. Resistance is seen near the 10-day moving average that comes in near $25.58. Short-term momentum is positive as the fast stochastic had a crossover buy signal.

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.