Silver slides as hawkish Fed lifts US Dollar and Treasury yields

Silver experienced a decline on Wednesday as a stronger US Dollar and rising US Treasury yields impacted the non-yielding metal following the Federal Reserve's monetary policy decision. The XAG/USD traded around $62.68, down 1.56% for the day. The Fed increased the federal funds target range by 25 basis points to 3.75%-4.00%, with a unanimous 12-0 decision.

The central bank reported a solid pace of economic activity, resilient domestic spending, and unchanged unemployment. Policymakers noted elevated inflation and believed the rate hike would bring it closer to the 2% target. The US Dollar Index surpassed the 100.00 mark, and the 10-year US Treasury yield rose toward 5.00%. Higher interest rates and bond yields generally negatively affect Silver by increasing the allure of interest-bearing assets.

Despite this, the metal's decline was limited as the quarter-point hike was anticipated. Fed Chairman Kevin Warsh conveyed a hawkish stance, emphasizing inflation's persistency and the economy's strength for policymakers to prioritize price stability, describing the labor side of the mandate as "in good shape." Silver's daily chart trended bearishly, as it stayed above the 50-day Simple Moving Average but below the 100-day and 200-day SMAs.

The Relative Strength Index and Moving Average Convergence Divergence suggested soft momentum and weak directional conviction. Support could be found near the 50-day SMA at $62, with further protection at $60.00 and $55 if selling pressure intensified. Resistance on the upside would face the 100-day SMA at $66; a breakthrough might expose the 200-day SMA at $73 as a stronger medium-term barrier.

Silver, a valuable metal with diverse uses, is often traded as a hedge against inflation or during high-inflation periods. Factors like geopolitical instability, economic conditions, investment demand, and mining supply can influence Silver prices. Silver prices typically mirror Gold's movements, and their ratio may help determine relative valuations.