Silver: Fed Tightens Its Tone as Price Returns to the Volume Profile Zone - Forex | PriceONN
Silver came under pressure following the Federal Reserve’s June meeting, at which policymakers kept interest rates unchanged at 3.50–3.75%. Nine of the 18 committee members still see the possibility of a rate increase this year, reinforcing expectations of further monetary tightening. The prospect of rising real yields reduces the appeal of non-interest-bearing assets such as […] The post Silver: Fed Tightens Its Tone as Price Returns to the Volume Profile Zone appeared first on ActionForex.

Fed's Hawkish Stance Casts Shadow Over Silver

The precious metals market, particularly silver, experienced a notable downturn following the conclusion of the Federal Reserve's June policy meeting. While policymakers opted to maintain the benchmark interest rate within the 3.50% to 3.75% range, the accompanying projections painted a less dovish picture than some had hoped. Crucially, nine out of the eighteen Federal Open Market Committee (FOMC) members indicated a possibility of at least one more rate increase before the year concludes. This projection sharpens the focus on continued monetary tightening.

The immediate implication for assets that do not offer a yield, such as precious metals, is a reduced attractiveness. As the prospect of higher real yields on interest bearing instruments becomes more tangible, investors may reallocate capital away from non-yielding assets. This shift in capital flows can exert downward pressure on prices.

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Adding another layer of complexity to the market's narrative, the Federal Reserve itself acknowledged that inflationary pressures remain stubbornly above its 2% target. A significant contributing factor cited was ongoing supply-side disruptions, particularly within the energy sector. These shocks are partly attributed to the heightened geopolitical tensions stemming from the Middle East, creating a volatile backdrop for economic forecasting and policy setting.

Technical Chart Signals Caution for XAGUSD

Examining the four-hour chart for the XAGUSD pair reveals a developing bearish structural pattern. After an initial attempt to push higher, which included a gap on June 15, the price action encountered significant resistance around the $71.54 mark. Subsequently, the metal retreated, finding itself within a critical volume profile area.

The upper threshold of this volume profile, situated at $68.24, was eventually broken. This breach followed an initial price reaction to the level, suggesting that selling pressure was building. Currently, the price is engaging with the control zone, defined between $64.306 and $64.492, from its upper side. This specific zone aligns with the consolidation range observed at the tail end of a prior downward price movement.

Further reinforcing the significance of this price cluster is the lower boundary of the volume profile, located at $63.411. Its proximity to the point of control (POC) area adds technical weight. Should the price fail to find footing here and break lower, a support level at $61.54 lies below. This level could serve as a substantial obstacle for further declines.

Current vertical volume readings offer little clarity, showing moderate activity without a decisive surge from either buyers or sellers. The Relative Strength Index (RSI) and moving averages are also signaling caution. Readings at 41, 39, and 44 remain below the neutral 50 level, indicating a lack of bullish momentum. While the moving averages are colored red, suggesting a bearish lean, their sideways movement implies a period of indecision.

Reading Between the Lines

The current technical posture for silver is one of cautious observation. With the RSI languishing below neutral territory and trading volumes failing to provide conviction for a directional move, the market appears to be in a holding pattern. The Federal Reserve's forward guidance on interest rates is likely to be the dominant factor dictating short-term price action.

Any deviation from a hawkish tone, or a signal of potential rate cuts sooner than anticipated, could dramatically shift the balance of power around the current price levels. Traders will be closely monitoring statements from Fed officials and upcoming economic data that could influence the central bank's future decisions. The interplay between monetary policy expectations and geopolitical undercurrents will be key to navigating the silver market in the immediate future.

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