Silver Price Forecast: XAG/USD plunges more than 3%, following FOMC meeting, down around $22.60s

• Silver plummets on the back of Fed’s Chairman Powell, saying that the “committee” could raise rates in the March meeting.
• On Wednesday, the US central bank kept rates unchanged and mentioned that QT would begin after the bank started its hiking cycle.
• XAG/USD is heavily downward pressured, approaching an upslope trendline that might give way towards $21.94.

Silver (XAG/USD) slides sharply on Thursday, after the Federal Reserve’s first monetary policy meeting, left open the door for a rate hike in March, as Fed’s Chairman Jerome Powell mentioned. At the time of writing, XAG/USD is trading at $22.58, down more than 3.97%.

The market sentiment remains positive, as portrayed by European and US equities climbing. In the meantime, the US Dollar Index, a measurement of the greenback value against six peers, advances 1.33%, sitting at 97.224, its highest level since July 2020.

On Wednesday, the US central bank held its first monetary policy meeting of 2022. Fed policymakers agreed to keep rates unchanged at the 0 to 0.25% range. Policymakers commented that inflation reflects “supply and demand imbalances related to the pandemic and the reopening of the US economy.” Furthermore, the balance sheet reduction will begin as soon as the central bank hikes rates.

Chairman Powell hit the stage following the Fed’s monetary policy statement release. He said that “…the committee is of a mind to raise the federal funds rate at the March meeting assuming that the conditions are appropriate for doing so.”

The US economic docket featured Initial Jobless Claims for the week ending on January 22, fell to 260K from 286K in the previous week, showing the labor market’s resilience after two consecutive weeks of increases. Meanwhile, the Gross Domestic Product (GDP) for Q4 rose by 6.9%, crushing 5.5% expectations.

XAG/USD Price Forecast: Technical outlook

Silver (XAG/USD) is under “heavy” downward pressure, breaking previous support levels, like the 100 and the 50-day moving averages (DMAs), lying at $23.25 and $23.00, respectively. That exposed an upslope trendline, drawn from December 2021 lows up to January ones, which lies around $22.35-50 area. In the event of a test of the latter, that would send XAG/USD tumbling towards January 7 cycle low at $21.94, followed by December 2021 lows at $21.42.