Silver price is trading sideways for the second consecutive session ahead of Jerome Powell’s testimony before the US Congress. The event, which is scheduled for Tuesday at 1800 GMT, comes a week after the Federal Reserve shifted its policy outlook. Prior to Wednesday’s decision, the bank had maintained a dovish tone by indicating that the country’s economic recovery is neither complete nor even. As such, its shift to a hawkish tone came as a surprise to investors and analysts alike.
In the prepared testimony, the Fed Chair noted that while the US economy continues to grow steadily, it still faces significant threat from the coronavirus pandemic. The Fed Chair further acknowledged that price pressures have risen ‘notably’. However, he maintained his belief that the inflationary pressures are transitory and that it will ultimately return to the bank’s target of 2%.
In addition to being an industrial metal, silver is viewed as a safe-haven and hedge against inflation. As such, the ongoing concerns on inflation are likely to boost silver price. However, the rebounding of Treasury yields continues to exert pressure on the precious metal. At the time of writing, the benchmark 10-year US bond yields were up by 0.8% at 1.50. In the previous session, the yields hit an intraday low of 1.35.
Silver price technical outlook
Since the beginning of the week, silver price has been trading sideways as it finds resistance at 26. On an hourly chart, it is trading along the 25-day EMA and slightly below the 50-day EMA. At the time of writing, the precious metal was down by 0.1% at 25.92.
I expect silver price to continue trading within a tight range ahead of the Fed Chair’s testimony later in the day. The borders of the horizontal channel are likely to be along the 50-day EMA at 26.07 and Tuesday’s intraday low of 25.74. Below the channel’s lower border, the bears will be targeting 25.50. On the flip side, a move above the upper border will place the next resistance level at 26.50.