Silver Price Hovers Above Key Support Amid Fed Rate Hike Expectations
The Silver price is currently hovering above a key support area at $63.00. Market expectations of a rate hike by the Federal Reserve later in the week, combined with dismal market sentiment due to elevated Oil prices, are boosting the US Dollar and posing headwinds for precious metals.
Friday's US Consumer Price Index figures beat expectations, particularly the core reading, which rose at its fastest pace in four months. This has cemented hopes that the Fed will hike interest rates by 25 basis points on Wednesday or risk a crisis of credibility that might send the USD into a tailspin.
The situation in the Middle East is compounding daily, with Oil prices rising above $103.00 and pushing towards its six-month high of $106.40. The Strait of Hormuz has been closed for six months, and now the Iran-backed Houthi militias have seized strategic areas to close the Strait of Bab el-Mandeb, the only alternative sea route to transport Crude from Gulf countries.
Technical analysis suggests that XAG/USD is testing the neckline of a bearish Head & Shoulders pattern. The Relative Strength Index and Moving Average Convergence Divergence histogram indicate a negative view, with the price action capped below the 50 midline and widening red bars.