Silver has taken investors on a roller coaster ride this week. After touching a 4-month high, silver prices have reversed directions and dropped below the 18.00 level. Will the slide continue?
Silver prices are steady on Friday, after losing ground in the past two sessions. Currently, silver is trading at $17.91, down $0.01 or 0.10% on the day.
This week’s dramatic events in the Middle East triggered sharp volatility in silver prices, as traders sought safe-haven assets while the crisis was in full swing. On Wednesday, silver prices touched $18.85, a 4-month high, after Iran launched missile attacks on two U.S. military bases in Iraq. Iran had vowed revenge after the U.S. killed a top Iranian general last week, and the Iranian response raised fears of all-out war between Iran and the U.S. However, the Iranian attack appeared calculated to avoid U.S. casualties and caused minimal damage. Investors took this as a signal that Iran was ready to de-escalate the situation, after saving face with an attack against U.S. forces. The ease in tensions restored investor risk appetite and has sent silver prices below the $18.00 level, a line with psychological significance. If risk appetite remains steady, we could see silver continue to slide next week.
After a week which was dominated by the U.S-Iran clash, it’s back to fundamentals on Friday. Nonfarm payrolls are expected to drop to 150 thousand, down from 266 thousand a month earlier. However, ADP nonfarm payrolls looked very sharp earlier this week, climbing to 202 thousand, its best showing since April. Wage growth is expected to rise to 0.3%, up from 0.2% in November. Strong employment numbers could further raise risk appetite and send silver prices lower.
On the downside, there is support at 17.50, followed by the 50-EMA line at 17.47. On the upside, the round number of 18.00 is an immediate resistance line. This is followed by resistance at 18.60, which is protecting the 19.00 line.
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.
