Silver Price Forecast: XAG/USD under pressure ahead of the Fed, tumbles to 23.00

• Metals drop sharply so far on Wednesday, ahead of the FOMC statement.
• US dollar gains momentum, rises modestly following better-than-expected US data.
• XAG/USD extends weekly losses, finds support at $23.00.

Silver and gold are falling sharply on Wednesday before the FOMC statement. XAG/USD is now off lows, hovering around $23.25, down 1.20% for the day. Earlier, it tumbled to $23.00, reaching the lowest level since October 18.

The sharp decline represents an extension of the slide that started from levels near $25.00 last week. It has accelerated over the last two days, when it dropped from $24.05.

The US dollar gained some momentum following US economic data but it still remains mixed for the day across the board as market participants await the outcome of the FOMC meeting. The Federal Reserve is expected to announce a taper to its purchase program. The tone and the words of Jerome Powell are likely to trigger volatility, including metals.

The ADP reports showed private payrolls increased by 571K in October, above the 400K expected, while the ISM service sector rose to a record high level of 66.7 in October. The data boosted US yields and added support to the dollar. Still, the FOMC meeting will be the key driver, at least until Friday’s NFP.

A daily close for XAG/USD under $22.70 would point to a renewed weakness while a recovery back above $24.00 should clear the way again for a test of $25.00.

Technical levels