Silver has erased all its Treasury buyback-driven gains after Fed Chair Warsh delivered a hawkish speech at the Jackson Hole Symposium. Traders now price a 67% chance of a September rate hike, putting the focus on the upcoming US CPI report.
Silver sold off on Friday after Warsh retightened financial conditions with a hawkish tone, wiping out the metal's gains from the Treasury buyback announcement. The move extended a broader correction in the "debasement" trades.
Warsh's hawkish comment retightens conditions
The key passage came when Warsh said he would be hard pressed to describe broad financial conditions as restrictive. According to Investinglive: "I would be hard pressed to describe broad financial conditions as restrictive". The market read that as Warsh leaning against the recent easing in financial conditions, and conditions retightened as a result.
Warsh also reiterated that the Fed is focused solely on inflation now and said progress has been slow. Only a soft US CPI report could bring hike probabilities below 50% and deter the Fed from moving at the upcoming meeting, since a probability staying at or above 50% could force the Fed's hand: failure to hike would send a dovish message and ease financial conditions again.
Rate-hike odds climb to 67%
The rate hike probability for the September meeting has risen to roughly 67%.
Silver holds near key support
On the daily chart, silver has erased its entire Treasury buyback-announcement rally and now trades around the 63.00 support zone. Buyers could step in there, with defined risk below support, targeting a rally toward the 80.00 handle; sellers want a break lower to extend bearish bets toward the 55.00 level.
On the 4-hour chart, the same 63.00 support zone stands out, with 66.70 as the first resistance target if buyers step in. On the 1-hour chart, a downward trendline defines the bearish momentum, with sellers leaning on it to push toward new lows and buyers looking for a break above it to rally into the 66.70 resistance.
Source: Investinglive
Trading involves risk.
Risk Disclaimer
