Silver Dropped as the Dollar Remained Near 16-Month Highs

  • Commodities Analysis

Silver yesterday settled down by -0.87% at 66563 as the dollar remained near 16-month highs as decades-high inflation brought forward Fed interest rate hike expectations. Minneapolis Federal Reserve Bank President Neel Kashkari said that he expects higher inflation to continue over the next few months, but warned against central bank overreaction as he maintained that inflationary factors will likely prove to be temporary. Retail sales data will take the spotlight in this week’s economic calendar after consumer confidence unexpectedly fell to a decade low as inflation dented sentiment. US household inflation expectations accelerated to a record high of 5.7%, as consumers continued to suffer from rising household expenses. Tightening monetary policy now to rein in inflation could choke off the euro zone’s recovery, European Central Bank President Christine Lagarde said, pushing back on calls and market bets for tighter policy.  
 
With inflation already twice its 2% target and likely rising further later this year, the ECB is coming under increased pressure to abandon its ultra-easy monetary policy and tackle price growth that is eroding households’ purchasing power. Speaking to European Union lawmakers, Lagarde admitted the inflation spike will be higher and longer than once thought but maintained it would fade next year, so policy action now would hit the economy just as price growth starts to moderate on its own.  
 
Technically market is under long liquidation as the market has witnessed a drop in open interest by -5.63% to settled at 8478 while prices down -581 rupees, now Silver is getting support at 66186 and below same could see a test of 65810 levels, and resistance is now likely to be seen at 67054, a move above could see prices testing 67546.  

Trading Ideas:
# Silver trading range for the day is 65810-67546.
# Silver dropped as the dollar remained near 16-month highs as decades-high inflation brought forward Fed interest rate hike expectations.
# Fed’s Kashkari said that he expects higher inflation to continue over the next few months
# US household inflation expectations accelerated to a record high of 5.7%, as consumers continued to suffer from rising household expenses

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