Silver Prices Edged Higher as Dollar Falls from Peak Highs

Silver prices moved higher on Tuesday on expectations for a faster pace of Fed rate hikes. The US dollar weakened after reaching highs on Friday as gold prices stabilized. Fed funds futures priced in just under five rate hikes for 2022 or about 121 basis points in tightening. US benchmark yields rose as the ISM Manufacturing Report for January showed signs of improvement despite a declining number. This scenario indicates growth and higher prices paid. 

Technical Analysis

On Tuesday, silver prices rose as ISM data beat economists’ expectations. Support is seen near Prices near an upward sloping trendline near 22.49. Resistance is seen near the 50-day moving average at 22.88. Short-term momentum is turning positive as the crossover of the two lines indicates a trend reversal. The fast stochastic is printing a reading of 16.84, below the oversold trigger of 20, but prices are becoming less oversold. Medium-term momentum is negative as MACD (moving average convergence divergence) index crossover indicates a sell signal. This scenario occurs when the MACD line (the 12-day moving average minus the 26-day moving average) crosses over the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram prints in negative territory with a downward sloping trajectory pointing to lower prices.

January ISM Manufacturing Data Declines

The ISM Manufacturing Index dropped to 57.6 in January from 58.8 in December. However, the index still beats economists’ expectations to drop to 57.5. The six biggest manufacturing industries, including food, transportation equipment, computer, electronic products, chemical products, machinery, and petroleum and coal products, all reported moderate to strong growth.