Silver Prices Drop Despite Rally in Gold as the Greenback Climbs

Silver prices fell on Monday after consolidating near a key resistance level. US treasury yields were mixed ahead of the Fed meeting, as the US 10-year yield moved up 7 basis points to close the day. The US dollar strengthened against a basket of currencies, reaching two-week highs ahead of predictions of tightening monetary policy. The Chinese Yuan bucked the trend as the Central Bank cut rates, increasing flows into Chinese markets. Gold prices moved higher as geopolitical Ukraine-Russia tensions increased the attractiveness of the safe-haven metal.

Technical Analysis

On Monday, silver prices declined for the second consecutive trading day after consolidating near the 200-day moving average. Support is seen near the 50-day moving average at 23.103. Long-term resistance is seen near the 200-day moving average at 24.63. Short-term momentum turned negative as the fast stochastic indicator shows that prices are no longer overbought. The fast stochastic is printing a reading of 73, below the overbought trigger level of 80. Medium-term momentum remains positive as MACD (moving average convergence divergence) index crossover indicates a buy signal. However, the MACD line (the 12-day moving average minus the 26-day moving average) converges to the MACD signal line (the 9-day moving average of the MACD line), as momentum might turn negative.

Flash PMI Data Shows Slower Expansion

The IHS Markit Composite PMI Output Index showed that both manufacturing and services sectors had slower growth during the month. The reading declined to 50.8 from 57.0, the lowest in 18 months. A reading below 50 indicates growth in the private sector. Omicron has stifled output more than demand. Growth will pick up once restrictions are relaxed.