Silver is defending the $59.44 to $58.53 retracement zone as rising September Fed hike odds keep Treasury yields firm and the dollar strong. Next week’s CPI report is the catalyst traders are watching to decide whether the metal extends losses or triggers a short-covering rally.
Spot silver is holding a technical battleground while the rate trade runs against it. The metal trades at $60.07, up $0.10 or 0.17% at 07:16 GMT on Friday, but it has given back $2.33 since last week’s $62.40 close. September rate hike odds near 63% are doing the damage, holding Treasury yields up and keeping the dollar firm.
FOMC minutes split the committee
The June FOMC minutes split the committee down the middle, with roughly half the members projecting another rate increase and the other half wanting to hold. That does not sound decisive until you look at where the market priced it.
CME FedWatch puts the July 28-29 hold probability around 70% to 76%, with the September 25-basis-point hike probability climbing to 63% to 65%. By December, futures are pricing an 85% chance that at least one more rate hike gets delivered before year-end. Geopolitical tensions in the Gulf are keeping inflation concerns alive, and Treasury yields are not coming down in that environment.
CPI is the catalyst
Next week’s Consumer Price Index report is the one number that can move those September odds. A reading that confirms inflation is still running hot gives Treasury yields and the dollar another leg, while a soft print could pull September pricing back toward a hold. Short sellers are leaning into the hike bet, so a miss forces covering.
The technical battleground
Silver is testing the $59.44 to $58.53 retracement zone drawn from the last completed swing up between $55.60 and $63.28. Counter-trend buyers who stopped the selling at $55.60 on June 24 may be trying to establish a higher bottom inside that zone, with an exit under $55.60 if they are wrong.
A hold there keeps the door open to the all-time 50% level at $60.83 and eventually the swing top at $63.28. Losing $57.22 breaks the structure and puts $55.60 back in play.
Source: FXEmpire
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