Silver has posted small losses in the Wednesday session. Currently, silver is trading at $17.57, down $0.10 or 0.50% the day.
Powell Signals No Change in Rates Likely
Fed Chair Jerome Powell testified before the House Financial Services Committee on Tuesday. Powell acknowledged that the China coronavirus could pose serious economic risks, but he maintained that the Fed did not plan to change its current monetary policy. Powell told lawmakers that the Fed was “closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy”. Most important for investors, Powell said that “the current stance of monetary policy will likely remain appropriate.”
Powell has now been at the head of the Federal Reserve for two years. Although his approach has been cautious, Powell has not shied away from making monetary moves– in 2019, the Fed trimmed rates three times, in response to weak global growth and the fallout from the ongoing trade war with China. The economic wildcard is, of course, the China coronavirus. The outbreak has severely disrupted China’s economy and is already having a negative impact on the global economy. If the virus is not contained shortly, the damage to the global economy will be substantial, and Powell and his colleagues at the Fed may have to revisit the possibility of lowering interest rates.
Later in the week, the U.S. releases key consumer numbers. Consumer inflation and consumer spending have both been soft in recent months, although the U.S. economy remains in good shape. CPI dipped to 0.2% in December, down from 0.3%. Another weak gain of 0.2% is projected for January. It’s a similar story with retail sales, which is expected to repeat with a gain of 0.3%. Any unexpected figure from these key indicators could shake up silver prices.
Silver Technical Analysis
Silver continues to trade in a narrow range between 17.50 and 18.00. On the upside, the 50-day EMA is currently situated at 17.67, just above the pair. The round number of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60. On the downside, 17.50 is under pressure in support. The 200-day EMA is at 17.09, followed closely by support at the round number of 17.00.