Silver Prices Traded Flat as Ukraine Concerns Counter Hawkish Fed Policy

Key Insights

• Silver prices held steady despite growing inflation concerns 
• The dollar strengthened following release of Fed minutes
• Benchmark yields fell after surging higher during the week
• Oil prices decline as US and EIA members commit to releasing strategic reserves 

Silver prices traded flat as rising inflation concerns increased demand for the safe-haven asset. Benchmark yields retreated today after grinding higher as the Fed announced its plans for aggressive policy tightening. The 10-year yield reaches its highest level of 2.67% since March 2019.

Gold and silver prices rose as fears about surging inflation have generated increased demand for safe-haven assets. The inflation situation counters guidance from the Fed about increasing interest rates.

Oil prices tumbled as member states of the EIA announce plans to release more strategic reserves. It is the biggest release since the creation of the stockpile in 1980. Analysts have different opinions on how much the release of supply will impact market tightness.

Jobless claims fell by 5,000 to 166,000 for the last week. This number, the lowest since 1968, signals how much the labor market tightened last week. The Dow Jones estimate was 200,000. The labor market has been subject to a severe worker shortage.

The surging demand for workers has led to surging wages and spiraling inflation.

Technical Analysis

Silver prices remained little changed near the 24.6 level as the focus remains on the new sanctions on Russia underpin XAG/USD. However, silver might face downward pressure to the $24.00 level due to rising yields and a firmer dollar.

Bulls might aim for silver to break the $25 level and further increase momentum. Support is seen near the horizontal trendline near 23.6. Resistance is near the $26.00 level. Short-term momentum turned negative as the fast stochastic had a crossover sell signal.

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