Silver Price Analysis – Silver Continues to Move Based on Rates

Silver Technical Analysis

The silver market, of course, was closed in the futures market for most of the day on Friday, but really, when you look around the world with CFD markets and the like, we’re pretty quiet, so the analysis stays the same. The $70 level continues to be a significant floor that you must pay close attention to. If we break below it, then we could challenge ourselves to $68 again, perhaps even the 200-day EMA.

This is all about interest rates, and in my analysis recently, I’ve been paying the most attention to the 10-year yield in the United States, which has a definite binary switch, if you will, at the 4.30% level. If we go above there, it is typically bad for silver because silver, of course, is a non-yielding asset. If it goes below there, then it gives silver a little bit of breathing room.

Yield Benchmarks and Geopolitics

The inflationary headwinds of a restrained crude oil supply for the world’s markets is the main culprit here—think Strait of Hormuz—but I also recognize that silver was so overdone before that it does make a certain amount of sense that it’s lost some of its luster. I think in a normal market we’re probably looking at a range between $70 on the bottom and $90 on the top, and we are trying to get back there.

But we have to keep an eye on those 10-year yields in America as well as some of the other major Bunds in Germany, Gilts in the United Kingdom, etc. But the 10-year is really my benchmark. So, looking at this chart, I do think we’re going to try to rally, but we’ve got a long weekend ahead of us that could have major implications as to where interest rates go. It’s only going to take a tweet, a press conference, or a statement from either the Iranian or US governments to get the markets moving again, so the main takeaway is watching interest rates and keeping your position size reasonable.

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