In Asian morning trading, spot silver saw a sharp short-term decline, falling to $29.00 per ounce, marking a 2.4% intraday drop. According to FXStreet analyst Christian Borjon Valencia, this decline follows a retreat from Wednesday's New York session after the Federal Reserve's resolution and Fed Chairman Powell's speech.
Valencia notes that silver is displaying a double-top pattern on a daily chart, indicating potential for further decline. On Wednesday, after the U.S. CPI release, spot silver briefly surged to $30.25 per ounce but fell significantly following the Fed's decision, closing at $29.70 per ounce with an intraday gain of 1.5%.
The Federal Reserve maintained the benchmark interest rate at 5.25%-5.50% for the seventh consecutive time, aligning with market expectations. The Fed's dot plot suggests a single rate cut in 2024. During a press conference, Fed Chairman Powell emphasized ongoing concerns about inflation, indicating a readiness to keep rates unchanged if inflation persists.
Powell reiterated that while inflation has decreased from its highs, it remains too elevated. He emphasized that current inflation data does not provide enough confidence for the Fed to begin easing policy.
Valencia explains that the double-top formation suggests further declines for silver. If silver breaks below the $29.00 per ounce support, it could fall to the May 18, 2021 high of $28.74 per ounce and further to the June 10, 2021 high of $28.34 per ounce. The ultimate target for the double-top pattern is $27.80 per ounce.
Conversely, if silver rebounds and closes above $29.00 per ounce, it may challenge resistance at $30.05 per ounce (the May 24 low).
As of 09:13 GMT, spot silver was trading at $29.00 per ounce.
