On Wednesday, May 22, spot silver prices plunged by nearly 3.7%, falling below the $31 per ounce mark. FXStreet analyst Christian Borjon Valencia highlighted the technical trend of silver prices, noting a significant decline influenced by hawkish Federal Reserve minutes.
Silver prices dropped more than 3.50% after reaching a daily high of $32.19 per ounce, ending the session down 3.69% at $30.78 per ounce. The hawkish tone of the Fed minutes prompted profit-taking in precious metals, affecting both gold and silver. The first key support level for silver is the psychological $30.00 per ounce.
The Federal Reserve released the minutes of its April 30-May 1 monetary policy meeting, showing increasing concern among officials about inflation. Members expressed uncertainty about the restrictive nature of current monetary policy and a lack of confidence in moving forward with rate cuts.
In the North American trading session, silver prices tumbled more than 3.50% following the release of the Fed’s “hawkish-leaning” minutes. Precious metals gave back some of their weekly gains, with silver falling to $30.80 per ounce after hitting a daily high of $32.19 per ounce.
Valencia noted that while the uptrend in silver remains intact, the metal is subject to mean reversion due to the speed and strength of the downside move. The momentum of buyers has faded, with the Relative Strength Index (RSI) becoming overbought and dropping below the 70.00 level, suggesting an increase in selling pressure.
Valencia identified the first support level for silver at the psychological $30.00 per ounce. If further weakness occurs, the next target would be the April 12 high at $29.79 per ounce, followed by $29.00 per ounce. If the downtrend extends, the next key support levels would be the May 18, 2021 high of $28.74 per ounce and the June 10, 2021 high of $28.28 per ounce. 
