Silver Price Daily Forecast – U.S. Dollar Strength Continues To Put Pressure On Silver
Silver is trying to bottom in the $11.70 – $12.00 range after the previous downside. As I’ve written yesterday, the major strength of the U.S. dollar is a big obstacle for silver upside. Today, the situation on this front did not get better for silver as the U.S. Dollar Index is higher than 102, while it was below 100 just a few days ago.
This means that the major flight to safety continues. Even gold, which traditionally benefits from turmoil as a safe haven asset, is under pressure. I continue to believe that it will be hard for silver to show material upside without a corresponding upside move in gold.
Nowadays, big quantitative easing programs are announced almost on a daily basis. Yesterday, the European Central Bank has announced that it will buy 750 billion euro worth of private and public sector securities.
While such purchases have no direct impact on the precious metals market, this money may ultimately get into a broader range of safe haven assets, including silver. However, any such transition will take time, so investors and traders should not count on any material support from quantitative easing programs for the precious metals markets in the coming days.
Today, silver made an attempt to rebound which was stopped near $12.30. Following the rapid decline after the breach of the $16.50 level, the pace of silver downside has decreased.
This is not surprising since silver is in the oversold territory, with RSI below 15. Silver continues to find support in the $11.70 – $12.00 range, and even additional dollar strength did not lead to another leg of downside – that’s a healthy sign.
Should the $11.70 – $12.00 level hold, silver will have a chance to attempt a rebound. The first near-term resistance level is at $12.30, followed by $12.90 and $13.30. I’d note that any upside move will likely require some stability on the U.S. dollar front.
The rapid upside of the dollar puts too much pressure on silver and other previous metals. While silver could have resisted this pressure under normal conditions, the current panic in the financial markets is just too significant to ingore. Just like traders in other financial instruments, silver traders will have to watch coronavirus news to get a feel of when the current panic might end.