Silver faced a decline of -1.12%, settling at 71306 as traders adjusted their positions in anticipation of potential rate cuts by the Federal Reserve. Federal Reserve Bank of Atlanta President Raphael Bostic expressed openness to lowering rates in the coming months, contingent on further data regarding inflation pressures. Bostic's comments about normalizing policy in the summer and the unexpected surge in January's producer price index, excluding food and energy, have added complexity to the interest rate outlook.
Despite a week of disappointing U.S. economic data, including stronger-than-expected inflation and weakening spending, policymakers remain committed to a wait-and-see approach on interest rate cuts, acknowledging the challenges posed by the current
economic landscape. The upcoming release of FOMC meeting minutes and statements from Fed officials will be closely watched for insights into the timing of the first rate cut. Traders, initially eyeing a reduction in March, now see a 53% likelihood of a 25bps cut in June, reflecting the evolving sentiment in the market.
Technically, the market is undergoing long liquidation, with a -0.46% drop in open interest to 21566, coupled with a price decrease of -806 rupees. Silver finds support at 71110, with a potential test of 70910 levels below. On the upside, resistance is likely at 71580, and a breakthrough could lead to testing 71850. Traders should closely monitor economic indicators, Fed communications, and market sentiment for a nuanced understanding of silver's price trajectory in this environment of uncertainty.