Silver Prices Fall as the Federal Reserve Raise Interest Rates

Silver prices maintained their downward trajectory on Wednesday following the Fed meeting. The dollar traded in a range. The Federal Reserve announced a 50-basis-point increase in Fed Funds rates, bringing the cost of borrowing between banks to 75-100 basis points.

Where appropriate, rate hikes will continue. On June 1, the Fed will begin reducing its balance sheet. This was a foregone conclusion and is seen as quantitative tightening.

The Federal Reserve will initiate a 47 billion dollar balance sheet run-off in three months, followed by a 95 billion dollar run-off in three months. Consumer and business expenditures continue to be robust. Economic activity was almost certainly harmed by the invasion of Ukraine. The Fed stated that the Chinese lockdowns would almost certainly result in more supply chain disruptions.

Technical Evaluation

Silver prices resumed their downward trend on Wednesday. Of the February 2022 lows near $22.00, there is support. Near the 200-day moving average of 23.77, resistance is seen.

Prices are oversold, with the fast stochastic reading ten points below the oversold trigger level of twenty. The RSI is currently reading 26, which is less than the oversold trigger level of 30.

The medium-term momentum has shifted to the downside, as evidenced by the histogram's negative correlation with the MACD (moving average convergence divergence). The MACD histogram's trajectory is negative, indicating a downward trend in price movement.