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Silver Flirting with $18 after Sharp Slide

By:
Kenny Fisher
Updated: Sep 27, 2019, 07:15 UTC

It continues to be a busy week for silver. The metal has steadied in Thursday trade but finds itself back under $18, after sharp losses a day earlier. Will silver show further volatility this week?

Silver
Silver has steadied on Thursday, after posting sharp losses on Wednesday. In the European session, the metal is trading at $17.97, up $0.06, or 0.47% on the day.

Higher Dollar Weighing on Silver

We continue to see volatility in silver prices this week. The metal jumped out of the gates on Monday, climbing 3.5%. However, these gains evaporated on Wednesday, as sliver declined 3.7% and is back below the 18.00 level, which has been relevant since early September. Silver has been acting as a safe-haven asset, much like gold. Both gold and silver posted sharp losses on Wednesday, as the U.S. dollar posted strong gains across the board, pushing the price of silver and gold downwards. Silver has shown some strong upward movement, posting monthly gains in each of the past three months. In August, the metal climbed an impressive 12.8%, as rising trade tensions between the U.S. and China led to nervous investors snapping up silver. Traders have likely come across headlines proclaiming that silver is headed to the lofty $20 level. I would caution traders that the road to 20.00 will be bumpy, as this level has held firm since September 2016.

U.S. GDP arrives as Advertised

The third estimate for U.S. GDP in Q2 was released with little fanfare, as the reading of 2.0% confirmed the second estimate. Although this reading was widely expected, it reiterates that the U.S. economy has slowed down considerably in the second quarter – the economy grew by 3.1% in the first quarter. The Federal Reserve’s recent rate hike highlights concern about the health of the economy, and if investor confidence sags, silver prices could move upwards.

Silver Technical Analysis 

The round number of 18.00 continues to be relevant. Silver posted sharp losses on Wednesday and broke below support at 18.60 and at 18.00. The latter line remains fluid and is currently an immediate resistance line. I expect further activity around the 18.00 line, but 18.60 appears safe in resistance. On the upside, 18.80 is the last resistance line protecting the 19-level. On the downside, there is a major support level at 17.50.

XAGUSD 4-Hour Chart

About the Author

Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.

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