Fed Minutes Put the Brakes On
Midweek the tone shifted. The Federal Reserve meeting minutes showed some officials are still open to raising rates if inflation stays elevated. That’s not what silver bulls wanted to read. Higher rates hurt silver and the warning about rising energy costs slowing growth while keeping inflation high made the picture even more complicated. Stagflation talk is never good for risk assets and silver felt that hesitation through the middle of the week.
CPI Kept the Inflation Story Alive
Friday’s March CPI was ugly on the energy side. Gasoline was up more than 20% for the month and fuel oil went even higher. I’ve been saying all week that the war was going to show up in the March data and there it was. The number didn’t change anything for the Fed and it didn’t change anything for silver either. The metal held its gains right through the print and closed the week near the highs. When a market absorbs bad news and doesn’t sell off, that’s telling you something about who’s in control.
What’s Changed Going Into the Week of April 17
The setup at the start of the new week is less favorable. Silver is trading near $74.28, WTI crude has moved back above $100 to around $104.65 and the U.S. Dollar Index is stronger. Both oil and the dollar are working against silver right now. Tuesday’s Producer Price Index report is the next inflation read to watch. Several Federal Reserve officials are also scheduled to speak and any hawkish signals will put more pressure on silver.
Weekly Forecast
The weekly gain was real but the tailwind that drove it is fading. Oil back above $100 keeps inflation risk elevated and reduces the case for near term rate cuts. A firm dollar adds to the headwind. My forecast for the week ending April 17 is sideways to slightly lower unless the PPI comes in soft or the Fed speakers strike a more dovish tone than expected. The charts are showing early signs of a momentum shift but the fundamental headwinds from oil and the dollar need to ease before that technical setup can follow through. Watch the $74.63 level. That’s where this market finds out whether buyers are still committed.
