Silver Slumps as Warsh Hawkish Comments Tighten Conditions; CPI in Focus

FUNDAMENTAL OVERVIEW

Silver declined on Friday following a hawkish address by Fed Chair Warsh at the Jackson Hole Symposium.

The crucial remark was his statement: "I would be hard pressed to describe broad financial conditions as restrictive." Traders saw this as a pushback against the recent loosening of financial conditions, prompting a tightening.

This development has deepened the corrections in the so-called debasement trades, pushing silver back to levels seen before the US Treasury announcement. September rate hike odds have also risen, with the market now pricing in roughly a 67% probability.

Warsh also reiterated the Fed's singular focus on inflation, stating progress has been slow. For this reason, only a soft US CPI report could lower the probabilities below 50% and dissuade the Fed from hiking at the upcoming meeting.

Should the probabilities remain at 50% or higher, the Fed may feel compelled to hike anyway, as not doing so would be interpreted as dovish and loosen financial conditions once more.

SILVER TECHNICAL ANALYSIS – DAILY TIMEFRAME

Silver has fully unwound the gains from the Treasury buyback announcement following Warsh's hawkish tightening of financial conditions.

The metal is currently trading near the 63.00 support level. Buyers may enter here with a clear risk below support, targeting a rally toward 80.00. Conversely, sellers are looking for a breakdown to add bearish positions aimed at the 55.00 level.

SILVER TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4-hour timeframe, the support around 63.00 is more evident. Buyers are expected to defend this area, with initial resistance at 66.70. Sellers, meanwhile, aim for a break below to push the decline to fresh lows.

SILVER TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

The 1-hour chart shows a descending trendline that characterizes bearish momentum. Sellers are likely to maintain pressure along this trendline with a defined risk above, aiming for new lows. Buyers seek a breakout for a rally toward 66.70 resistance. The red lines mark today's average daily range.

UPCOMING CATALYSTS

The US ADP report is due today. Fed's Waller, US Jobless Claims, and the ISM Services PMI are scheduled for tomorrow. The week ends with Friday's US NFP report.