Silver Prices Slide but are Oversold

Key Insights

• Silver prices moved lower as the dollar rallied.
• Treasury yields traded higher despite weak PMI data.
• Gold prices fell, weighing on the precious metals complex.

Silver prices fell on Monday. The dollar moved higher, which weighed on the precious metals complex. Since silver is priced in dollars, a stronger greenback weighs on silver prices.

The imminent 50-basis point Fed rate hike underpins a stronger dollar and a bullish outlook. The Fed is expected to raise rates this week. Gold prices moved lower as the dollar railed.

The ISM’s manufacturing index fell to 55.4 last month, the lowest since July 2020, from 57.1 in March.

Economists polled had forecast the index is rising to 57.6. The ISM survey’s forward-looking new orders sub-index dropped to 53.5 from 53.8 in March. The survey’s measure of supplier deliveries rose to 67.2 from 65.4 in March.

Technical Analysis

Silver prices fell on Monday but settled above the session lows. Support is seen near the February 2022 lows near $22.00. Resistance is seen near the 200-day moving average of 23.80. Short-term momentum has turned positive as the fast stochastic generates a crossover buy signal. Prices are oversold as the fast stochastic prints a read of 10 below the oversold trigger level of 20.

The medium-term momentum turned negative as the histogram prints negatively with the MACD (moving average convergence divergence).

The trajectory of the MACD histogram is in negative territory, which reflects the downward trend in price movement.