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Monday’s trading session proved to be a rollercoaster ride for silver investors as the precious metal witnessed a sharp drop, following the broader equities selloff. Despite this setback, silver has shown remarkable resilience by holding above the crucial 200-day moving average. Traders are advised to proceed with caution, as a breach of this level could trigger further downward movement.
Chart Analysis: Navigating Through a Range-Bound Market
This week’s price action indicates the formation of a trading range, with the 200-day moving average acting as a strong support level and the 50-day moving average as a resistance point. This pattern suggests that we may see a wide trading range in the near future, offering opportunities for both bullish and bearish traders to capitalize on.
Fed Watch: Balancing Act Between Inflation and Rate Cuts
The Federal Reserve is closely monitoring inflation trends and considering potential rate cuts to stimulate the economy. While the stock market remains on edge, the Fed is focused on economic data to guide its decisions. Market expectations are leaning towards a 50-basis-point cut in September and another cut in December, as indicated by the CME FedWatch Tool.
Positive Signals from the Labor Market
Surprising jobless claims data has brought relief to investors concerned about labor market weakness. The focus now shifts to upcoming U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) releases for further insights into the Fed’s policy direction.
Unlocking Silver’s Potential: A Glint of Bullishness
Even amidst the current downtrend, silver holds promising prospects for the future. The metal stands to benefit from increased risk aversion or expectations of looser monetary conditions. Various scenarios could propel silver prices to new highs in the coming months, painting a bullish long-term picture for traders who can weather the short-term fluctuations.
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