Silver Cracks to Near $22.50 as US Dollar Strengthens After Upbeat US Data

(September 27, 2023 - Sagar Dua)

• Silver price drops vertically to near $22.40 after upbeat US Durable Goods Orders data.
• Fed Kashkari said more rates seem warranted and are needed to remain high to cool things off.
• The US Dollar Index extends its upside journey and prints an almost fresh 11-month high at 106.60.

Silver price plunged to near $22.45 in the early New York session after the release of the upbeat Durable Goods Orders data for August. The economic data surprisingly rose by 0.2% vs. expectations of a 0.5% decline. In July, Orders contracted sharply by 5.6% as the US manufacturing sector is going through tough times.

A surprise gain in Orders for core goods indicates that the demand outlook is improving and firms are digesting fears of higher interest rates from the Federal Reserve (Fed). US Manufacturing PMI has been consistently declining for a longer period and a surprise rise in core goods orders may improve factory activities, which would make the US economy more resilient.

Meanwhile, Minneapolis Fed Bank President Neel Kashkari said that there was a risk interest rates might have to go higher but added that it was hard to know. Earlier, Fed Governor Kashkari commented that the economy is fundamentally much stronger than projected. Therefore, more rates seem warranted and are needed to remain high to cool things off.

The US Dollar Index (DXY) extends its upside journey and prints an almost fresh 11-month high at 106.60. 10-year US Treasury yields recovered to near 4.54%.

Silver technical analysis

Silver extends downside to near the support zone plotted in a narrow range of $22.24-22.30 on a two-hour scale. Downward-sloping 20-period Exponential Moving Average (EMA) at $22.87 indicates that the short-term trend is bearish.

The Relative Strength Index (RSI) (14) shifts into the bearish range of 20.00-40.00, which warrants more downside.