- Silver prices fell sharply to around $22.40 after high US durable goods orders data.
- Fed Chairman Kashkari said that raising rates further seems reasonable and that it should be kept high to cool down the situation.
- The Dollar Index extended its strong run and printed a new 11-month high at 106.60.
The price of Silver (XAG/USD) fell to around $22.45 in the early New York session after the release of encouraging data on durable goods orders in August. Economic data rose by a surprising 0.2% compared to expectations of a 0.5% decline. In July, orders suffered a sharp decline of 5.6%, in a difficult period for the US manufacturing sector.
The surprising increase in orders for primary goods indicates that demand prospects are improving and that companies are coming to terms with the fear of an interest rate hike by the Federal Reserve ( Fed). The US manufacturing PMI has a long period of steady decline, and a surprise increase in orders for basic goods will boost factory activity, making the US economy stronger.
For his part, Minneapolis Fed President Neel Kashkari said there was a risk that interest rates would have to rise, but added that it was difficult to know. Earlier, Fed Governor Kashkari commented that the economy was fundamentally stronger than expected. Therefore, raising rates further seems reasonable and they should remain high to cool things down.
The US Dollar Index (DXY) extended its strong journey and printed a new 11-month high of 106.60 points. The US 10-year Treasury yield recovered to around 4.54%.
Silver technical analysis
Silver extended its decline near the support zone taken in the tight range of $22.24 – $22.30 on the two-hour scale. The downward slope of the 20-period EMA at $22.87 indicates that the short term is bearish.
The Relative Strength Index (RSI) (14) is moving towards the bearish range of 20.00-40.00, justifying further declines.