Silver Price Daily Forecast – Silver Is Hit By Broad-Based Selling

It’s been a tough opening for all assets, including the perceived safe heaven assets like silver and gold. While gold is doing rather well, losing “only” 4%, silver is getting absolutely crashed and is down about 15%.

This selling comes despite the recent move by U.S. Federal Reserve to cut rates to 0% – 0.25%. Typically, lower rates are bullish for precious metals which do not pay interest for holding them.

However, the current situation is extraordinary. The market interprets the Fed’s move as a sign that hard times are ahead for the U.S. economy. The consensus right now is that recession is around the corner due to coronavirus containment measures.

Investors are in panic mode, trying to raise as much cash as they can. This is the only possible reason why silver and gold can have that much downside in an environment that is theoretically bullish for them.

Silver is losing more ground than gold in a continuation of the previous pattern – silver has been underperforming gold this year. At this point, it looks like market participants are focused on a very limited number of safe heaven assets – the U.S. Treasures, whose yield settled firmly below 1.00%, and gold, which is flat year-to-date despite the recent downside.

I’d note that it is possible that silver also suffers from forced selling by those investors who got in trouble playing with margin in other assets. In this environment, silver will need a pause in the general market sell-off to be able to gain some ground.

Technical Analysis

In recent days, silver breached several major support levels and entered a deeply oversold territory. The panic nature of selling means that investors and traders should not blindly count on support levels to provide material help in the coming few days.

At the same time, silver might meet resistance on its way back to $14.00. Those market participants who have been puzzled by the recent price action and did not sell their silver may want to use this level as an exit point.

Silver needs the general market to calm down to have a chance for sustainable upside. In this case, it will have the opportunity to catch up on gold whose performance is much better in 2020.