The silver market continues to see a lot of overhead pressure at the moment, as the market will continue to see a lot of questions asked about the US dollar, and interest rates as well. Silver is something that we need to pay close attention to, as the market is so sensitive to risk appetite.
Silver has pulled back just a bit during the early hours on Monday as we continue to see a lot of noisy behavior as we are hanging around the 50-day EMA. The 50 day EMA of course is an indicator that a lot of people will pay close attention to as it is quite often dynamic support and resistant. If we break down from here, then we could go looking to the $30 level, which of course is a large round psychologically significant figure and an area that I think a lot of options traders will probably be paying close attention to.
The question now is whether or not silver can turn around and rally, which quite frankly, I think what we are seeing in the precious metals markets is a little bit of a breath of fresh air due to the fact that the incoming Trump administration is more likely than not going to be anti-war. So, the geopolitical piece of the precious metal sector seems to be falling apart. So, with that being the case, it comes down to interest rates and the US dollar.
A lot of the usual suspects are in focus, and right now with a strengthening US dollar, it continues to put downward pressure here. I still think the $30 level will be crucial though, so I want to pay close attention to it. I wouldn’t short silver, but I also wouldn’t necessarily jump in with a huge position here either.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.