XAG / USD continues to rebound from near-term support below USD 28.00, according to the FOMC
- Silver consolidates losses from the eight-day low, picking up on recent bids.
- Sluggish markets trigger a corrective pullback in the absence of critical catalysts.
- Fed chairman Powell urged people to accept reflation fears, also eyeing Dot-Plot.
Silver is showing a corrective pullback from a 1-week low at $ 27.70, up 0.12% for the day in the middle of Wednesday’s first Asian session. This puts the white metal in a three-day downtrend as markets prepare for the US Open Market Committee (FOMC) meeting.
A contrasting move in the US retail sales and producer price indexes for May was the latest contributor to market indecision about the Fed’s next move amid reflation fears. While retail sales fell 1.3% versus the expected -0.8%, the forecast PPI rose more than 6.3% to 6.6% year-on-year.
Fed politicians have labeled the escalation in price pressures temporary, largely due to the supply crisis caused by Covid, but the latest U.S. economic data keeps suggesting something else, which makes today’s case of the FOMC interesting.
Ahead of the meeting, Westpac said: âFirst, after the meeting, the committee will provide the quarterly projections that guide its key expectations for the next three years. Second, Chairman Powell’s press conference will provide a good indication of the confidence the committee has in its central projection for both inflation and the labor market – the two core concerns of the FOMC. Third, a risk assessment is presented for these two aspects of the economy. This will help gauge how large the impact of key risks will be on the outlook for policy should they materialize. “
Read: Fed Rate Decision Preview: Chairman Powell Will Set Market Response
It’s worth noting that the recent mounting tensions between Western friends, led by the US and China, are combined with fears of the Delta variant of the coronavirus (COVID-19) to weigh on silver prices.
Amid those games, 10-year US Treasury yields fell for the first time in three days, while Wall Street benchmarks also closed slightly at the end of Tuesday’s North American trading session.
Looking ahead, silver sellers may be taking cues from China’s retail sales and industrial production for May due to industrial usage, but much attention is being paid to today’s Fed release.
A daily closing price below an upward sloping trendline starting April 29th at around $ 27.45 will be necessary for the silver bears to keep the reins. Otherwise, the $ 28.00 and monthly resistance level near $ 28.30 will catch the market’s attention.