Silver price (XAG/USD) is trading within a narrow range around $28.00 during Monday’s North American session, as investors await the Federal Reserve’s (Fed) monetary policy decision scheduled for Wednesday.
Market Sentiment:
Market participants anticipate a dovish stance from the Fed, with expectations of an unchanged interest rate decision for the eighth consecutive time. The Fed is likely to acknowledge progress in bringing inflation back to the 2% target and highlight potential risks to the labor market.
Additionally, renewed geopolitical tensions in the Middle East have provided temporary support for silver prices, as the precious metal tends to attract safe-haven flows during times of uncertainty. The US Dollar Index (DXY) has also strengthened, reaching a fresh two-week high near 104.70.
Meanwhile, the 10-year US Treasury yields have declined to 4.18% on expectations of Fed rate cuts starting in September. Lower yields on interest-bearing assets make non-yielding assets like silver more attractive for investors.
Technical Analysis:
The silver price has weakened after breaking below a Double Top formation and the June 26 low of $28.60 on a daily timeframe. This breakdown has resulted in a bearish crossover, suggesting potential further downside. However, the 200-day Exponential Moving Average (EMA) around $26.86 could act as temporary support.
The 14-day Relative Strength Index (RSI) has entered the bearish range of 20.00-40.00, indicating continued bearish momentum.
