XAG/USD falls nearly 8% on the week as bears eye $22
- Silver was down almost 8% this week, the biggest drop of the year.
- The greenback is posting its best week since June 2021, with the DXY stable at 97.251.
- XAG/USD is still under downward pressure and a break below $22.35 would reveal $22.00 and higher.
Silver (XAG/USD) is looking forward to ending its worst week of the year, falling for six straight days and trading at $22.39 at the time of writing. However, the white metal is down 7.90% this week, the biggest since November 2021, when it lost 5.90% of its value.
The king dollar is back, gaining 1.70% on the week, its biggest since June 2021
The US Dollar is the week’s top winner. So far on the week the US Dollar Index, a measure of the dollar’s value against a basket of its rivals, is up 1.70% to 97.251. It’s the week’s biggest gain since June 2021, when the US Federal Reserve’s preferred indicator of inflation, personal consumption spending (PCE), rose to 4.9%, the highest since June 1982.
On Friday, the US Bureau of Economic Analysis reported that December’s core personal consumption expenditure (PCE), the Fed’s preferred indicator of inflation, rose 4.9%, 0.1% higher than expected, and the 4th figure reported in November .7% left behind.
Meanwhile, investors appear to be rebalancing their portfolios after the FOMC monetary policy meeting. Although the policy statement was perceived as a hawkish hold, the market reaction was zero. However, when Fed Chair Jerome Powell stated at his press conference that “the committee intends to raise the federal funds rate at the March meeting,” the sell-off in stocks began
Before Wall Street opened, Minnesota Fed President Neil Kashkari went astray. He said the Fed needs to balance the US economy by raising interest rates. Noting that the central bank doesn’t know how many hikes are needed, Kashkari stressed that the Fed will make adjustments as more data comes in.
XAG/USD Price Prediction: Technical Outlook
Silver is trending down, although USD bulls are struggling to break an uptrend line drawn from the December 2021 lows to the January lows, which hover around the $22.35-$50 range. In the event of a test of the latter, XAG/USD would drop towards the Jan. 7 cycle low at $21.94, followed by a December 2021 low at $21.42.