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.
Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently, Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).
