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Asset Watch

Markets await Central Banks rates decisions

 

Wednesday, July 26, 2023

Sliver Prices, Chart and Analysis

• Central banks decisions may cause recession
• Silver price faces key tech levels

 

This week, markets are closely anticipating the interest rate decisions of major central banks, with the Federal Reserve being the first on the list. The market consensus expects a 25-basis points rate hike. Investors believe that this rate hike to be the last one in the rate hike cycle of the Fed however, it is unlikely that the Fed to confirm that this rate hike will be the last. This hesitation is driven by several economic factors that could impede a sustained decline in inflation levels.

One such factor is the robust demand in the housing market, which is outstripping the available supply and can lead to higher prices. Additionally, a surplus of job opportunities compared to the number of unemployed individuals could drive up wages and production costs, potentially leading to higher prices for goods and services. Another concern is the resurgence of energy prices, which can further contribute to inflationary pressures in the economy.

The European Central Bank (ECB) meeting is also eagerly awaited by the markets. While it is likely to raise interest rates by 25 basis points, the focus will be on the ECB’s future policy direction. Investors will be seeking hints about the possibility of further rate hikes or a pause in the September meeting.

Investors have not priced in any additional interest rate hikes (25 basis points) by the Federal Reserve in the September meeting. While, they have priced in a rate hike (25 basis points) by the European Central Bank in September, with an approximate 60% probability. The continuation of central banks in raising interest rates beyond the current hikes could potentially create economic challenges, impacting the borrowing ability of individuals and businesses and increasing the risk of an economic recession in these economies.

Silver Daily Price Chart

 

Chart source ADSS Platform

At the start of July, the silver started a bullish trend creating higher highs with higher lows. This move made the precious metal to test on July 20 a multi-week high at 25.26.

Currently, the price moves within the trading zone 23.52 – 24.69 therefore, a daily close above the high end of the zone could encourage traders to rally the price towards 26.11 while, a daily close below the low end of the zone may send the price towards 22.59. That said, the support level located at the 200-day SMA at 23.13 should be considered.


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