Silver Price Analysis: XAG/USD drops to near $23 as US Dollar resumes upside journey

• Silver price drops sharply amid fears of more interest rates from the Fed.
• The US Dollar Index remains in the grip of bulls as the global economy is on the cusp of a slowdown.
• Silver price faces selling pressure near the 50% Fibonacci retracement at $23.66.

Silver price (XAG/USD) drops to near $23.00 in the early New York session. The white metal faces a sell-off as the US Dollar resumes its upside journey after a mild correction to near 105.90. The appeal for the US Dollar improved as Federal Reserve (Fed) policymakers delivered a hawkish commentary on the interest rate outlook.

The S&P500 opens on a bearish note as investors remain worried about government shutdown risks. The US Dollar Index remains in the grip of bulls as the global economy is on the cusp of a slowdown. European economies are struggling to bear the consequences of higher interest rates by the European Central Bank (ECB) while the Chinese economy is facing deflation risks.

On the contrary, the US economy has absorbed the pitfalls of higher interest rates by the Fed efficiently, making the US Dollar resilient in comparison with other G7 economies.

Meanwhile, US New Home Sales demand dropped to 675K vs. expectations of 700K and the former release of 714K. The demand for new homes dropped due to higher borrowing costs. The US Conference Board reported Consumer Confidence Index declined to 103.00 from 108.7 in August as households worry about the Fed’s ‘higher for longer’ interest rates plot.

Silver technical analysis

Silver price faces selling pressure near the 50% Fibonacci retracement (plotted from August 30 high at $25.00 to September 14 low at $22.30) at $23.66 on a two-hour scale. The white metal drops below the 50-period Exponential Moving Average (EMA) at $23.25 indicating that the short-term trend has turned bearish.

The Relative Strength Index (RSI) (14) skids into the bearish range of 20.00-40.00, which indicates that a bearish impulse has been activated now.

Silver two-hour chart