Silver retreated near $27 per ounce today on a wave of recession fears and selling pressure across the financial markets, but managed to stopped deeper declines before reaching the SMA200 (red line, near $26.2). A strengthening Japanese yen and the Bank of Japan's decision of reversing its years-long extremely dovish monetary policy supported declines in silver prices, as well as the broader precious metals market, when some institutions were forced to withdraw margins and bullish silver bets.
- Despite recession fears, we're also still not seeing particularly dovish voices from the Fed, with statements from Chicago Fed chair, Austen Goolsbee suggesting that the U.S. central bank doesn't need to rush policy easing very much at all, although the market is pricing in about a 50% chance of an emergency rate cut, later this week, and about 120 bps of total U.S. cuts, in 2024.
- Also, today's ISM data from the U.S. services sector suggests that a recession is not yet a foregone conclusion. Silver is also a far more procyclical precious metal than gold and weak macro data is not necessarily a short-term upside catalyst for silver, due to high industrial usage and demand. The situation on silver futures is not very simple, because historically both silver, and gold, risen amid recessionary fears.
SILVER (D1 interval)
Nevertheless, the unsettled political situation and slowly declining bond yields may support precious metals prices in the medium term. In such a scenario, silver may return to growth after a rebound above $28.5 per ounce. The main resistance is around $29 and $31 per ounce, where we see significant historical price reactions. Key support is around $25 and $26 per ounce, where we see the 61.8 Fibonacci retracement of the February 2024 upward wave and the SMA200 (red line).
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Source: xStation5
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