Silver fell as the Fed decided to adopt a higher for longer interest rate stance

The price of silver yesterday decreased by 1.12% to settle at 74654 as markets anticipate the U.S. Federal Reserve would choose to maintain a higher or longer interest rate stance to curb inflation. Inflation, according to Fed officials, is still “far above” the central bank’s 2% target. Michelle Bowman, the governor of the Federal Reserve, reaffirmed the need for additional efforts to lower the inflation rate. In order to meet the Fed’s twin mandate of maintaining low unemployment and inflation, Philadelphia Fed President Patrick Harker remarked that “some additional tightening may be needed to ensure the policy is restrictive enough.”

Concerns about an approaching recession were allayed, however, by data showing a startling turnaround in the eurozone. A study revealed that the eurozone’s economy expanded faster in April and reached an 11-month high. Data from the S&P Global (NYSE: SPGI)-published HCOB Flash Eurozone Purchasing Managers’ Index (PMI) survey showed an increase from 53.7 in March to 54.4 in April.

Markets are currently pricing in an 84% chance of a 25-basis-point interest rate increase in May, which puts the dollar on track to post its first weekly gain in more than a month and drives up the price of bullion for international purchasers. The Silver Institute reported that last year’s increase in global demand for silver which reached a record high of 1.24 billion ounces led to a massive supply gap and forecast further shortages in the years to come.

Technically, the market is in long liquidation because open interest has decreased by 13.64% to settle at 9461 while prices are down by -847 rupees. Currently, silver is receiving support at 74231, and a move below that level could result in a test of the 73807 level. Meanwhile, a move above that level could result in a test of the 76041 levels.

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