Silver stays firm after rallying more than 6% on Monday on investors’ flight to safety following the collapse of the Silicon Valley Bank and Signature Bank. Nevertheless, worries about a potential spread had waned. At the time of writing, the XAG/USD (Silver) exchanges hands at $21.68 a troy ounce.
- Silver price dropped sharply recently, following solid US jobs and housing data.
- The ECB surprised the markets with a 50 bps hike; the following meetings are live.
- Silver Price Analysis: To remain downward biased, below $23.10.
Silver Price Action
Silver prices retreated from weekly highs reached during the day at $21.96 due to several technical reasons. The 200, 50 and 100-day Exponential Moving Averages (EMAs) confluence around the $21.79-86 area capped the white metal climb. Therefore, the Silver closed Tuesday’s session at around $21.68, below the 200-day EMA. That said, the Silver is neutral to upward bias, though a daily close above the 200-day EMA must shift the bias neutral upwards.
On the upside, the Silver first resistance would be the 200-day EMA at $21.79. Once cleared, the next supply zone would be the 50/100-day EMAs intersection, at $21.84-86, followed by the $22.00 figure.
On the flip side, the Silver first support would be the 20-day EMA at $21.26. A breach of the latter will expose the March 10 daily high turned support at $20.78, followed by the March 13 low at $20.50
Unemployment claims in the US dropped, warranting further action by the Fed
Sentiment remains fragile, with most global equities dropping except the Nasdaq 100. The European Central Bank (ECB) raised rates by 50 basis points (bps) and stated that inflation remains too high. However, the statement did not provide forward guidance regarding future monetary policy decisions.
The US economic docket revealed that unemployment claims, reported by the US Bureau of Labor Statistics (BLS), eased below the 200K mark, a sign of the labor market tightness. Initial Jobless Claims rose by 192K vs. 205K, estimated by market participants. At the same time, housing data, led by Housing Starts and Building Permits, exceeded estimates, showing the economy’s resilience despite Fed’s aggressive tightening cycle.
The greenback remains under pressure, as shown by the US Dollar Index (DXY), down 0.26% at 104.478. US Treasury bond yields are recovering some ground, with 2s up 13 bps at 4.019%. On the contrary, the 10-year benchmark note rate is 3.432%, down two bps, a tailwind for silver.
What to watch?
The US economic calendar will feature Industrial Production, Capacity Utilization, and the University of Michigan (UoM) Consumer sentiment.
White Metal (Silver) Technical analysis
The XAG/USD reached for two straight days the $22.00 mark but failing to hold to gains showed sellers’ commitment to keeping the price below the figure. Why? Because after the two attempts, the XAG/USD dropped below the confluence of daily Exponential Moving Averages (EMAs), particularly the 200-day at $21.78. therefore the path of least resistance is downwards. The XAG/USD first support would be $21.50, followed by the 20-day EMA at $21.29, and then the figure at $21. Alternatively, a daily close above $22.00 could pave the way for further upside.