The silver price has experienced a sharp decline to around $30.30 as the US Dollar gains strength. This decline comes as investors eagerly await the preliminary US S&P Global PMI report for June, set to be released at 13:45 GMT. It is expected that the report will show slower growth in both Manufacturing and Services activity. The US Dollar Index (DXY) has reached a six-week high, indicating a bearish market sentiment as global PMI figures fall short of expectations.
Despite the current pressure on silver prices, the overall outlook remains positive as investors anticipate the Federal Reserve to cut interest rates at least twice this year. This expectation arose following soft US inflation data and slower-than-expected growth in Retail Sales for May. Markets now anticipate two rate cuts, rather than the one initially projected by policymakers. Minneapolis Fed Bank President Neel Kashkari expressed optimism that inflation would return to the bank’s target of 2% within two years, although concerns remain about high wage growth.
In terms of technical analysis, the silver price has rebounded after finding support near the lower border of a Rising Channel chart pattern on a daily timeframe. The white metal has crossed above the 20-day Exponential Moving Average (EMA) near $29.90, signaling a bullish near-term trend. The 14-period Relative Strength Index (RSI) is hovering in the 40.00-60.00 range, indicating investor indecisiveness.
As the US Dollar continues to strengthen and uncertainty surrounds global economic growth, the silver price may face further fluctuations in the near future. However, the expectation of Fed interest rate cuts could provide support for silver prices in the long run. Investors will closely monitor upcoming economic data releases and Fed statements for further insights into the direction of silver prices.
