September 26, 2023
London, UK

Silver Price Reenters Bearish Territory

Silver price

Silver price retreated today as the rebound from the two-year lows met stiff resistance at the 200-week moving average around $20.80. The global shaky environment above the stocks and bonds has also affected the metals. The rising threat of a global recession, the hawkish Fed continuing to raise interest rates, and the escalation in Russia – Ukraine conflict (Crimea Bridge) weigh on all assets. This is not a positive environment for precious metals commodities.

Investors are expecting the Federal central bank to raise, for one more time, by 75-basis-point the interest rates next month. The expectations support a strong U.S. dollar which is already trading at 20 year high. At the same time, bond yields hold near 12-year highs.

Last Friday, the Bureau of Labor Statistics reported that 263,000 jobs were created in September above the Wall Street expectations of 248,000. The unemployment rate fell to 3.5% in September, down from August’s reading of 3.7%. The consensus was the unemployment rate to remain at the same level.

Silver Demand

The silver industrial demand increased by 9% in 2021 marking the biggest increase since 2010, according to Silver Institute data. The post-pandemic rebound of industrial production and re-opening of businesses supported the sentiment. Silver is an important component of green technologies, especially in photovoltaic and electric vehicles. As industries across the globe are moving toward a greener economy, investments in decarbonization and electrification projects are expected to keep growing.

The silver supply has also increased by 5.3% in 2021 and it was the biggest annual rise in output since 2013.

Silver Price In Bearish Mode

Silver price trades 1.21% lower at $19.34 and gold is 0.20% lower at $1,664. Silver price managed to recover from a 28-month low and a rebound started on September 28.

Silver was the worst performer among precious metals in 2022. The silver price has lost more than 17% since the beginning of the year, while gold has lost over 8% in the same period. Both precious metals are victims of the strong U.S dollar and the rising interest rates around the globe. The silver price hit a historic high of $49 back in 2011. In March 2020 at the start of the pandemic, the metal plunged to a low of $11 but managed to rebound up to $30 by the summer of 2020.

Silver technical picture remains bearish, as the price hovers below the 100-day moving average, while as of writing the silver price breached the 50-day moving average. The first support would be met at $18.77 the low from October 3. If selling pressure persists below 18.77 then we might test 17.52 the two-month low (September 2).

On the upside, bulls need to break above $19.92 the 100-day moving average. A close above might challenge $21.22 the top from October 4.

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