Silver On MCX Settled Down -1.77%

Silver on MCX settled down -1.77% at 38721 dropped to the lowest settlement in three weeks building on a retreat that started Wednesday as the Federal Reserve raised interest rates and sounded determined to hike again this year. The precious metal often drops when rates rise, as some investors back away from the metal because it doesn’t pay interest. Silver prices recovered on Wednesday following a five-day skid that shed more than 5% from the grey metal.

The recent pullback is partly attributed to profit-taking following a three-week rally, which drove silver to nearly two-month highs. The return of risk appetite in the financial markets over the past week has also benefited equities at the expense of haven assets, such as silver. While Commodity markets were on edge after the Federal Reserve raised interest rates on Wednesday and gave some details about its plan to normalize monetary policy this year.

The central bank maintained its outlook on one addition rate hike this year and also said it plans to shrink its $4.5 trillion balance sheet “this year.” A hawkish Fed usually bodes well for the U.S. dollar, but this wasn’t the case on Wednesday after multiple economic indicators painted a negative picture of the U.S. economy.

In particular, core inflation rose at the slowest pace since 2015, raising red flags about the Fed’s plans to normalize monetary policy. Technically market is getting support at 38468 and below same could see a test of 38214 level, And resistance is now likely to be seen at 39063, a move above could see prices testing 39404.

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Suhani Verma

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