Silver Price Daily Forecast – Yesterday’s Strength Transforms Into Upside
Markets Are Back To Risk-Off Mode Following The Disappointing Initial Jobless Claims Data, But Silver Gains Ground
As I wrote yesterday, silver showed material strength at the $14.00 support level despite stronger U.S. dollar and weaker stocks, which highlighted its underlying strength.
Today, the market learned that as much as 6.6 million Americans applied for unemployment benefits. This number was materially worse than the analyst consensus of 3.5 million.
The bad news has immediately led to the strength of the U.S. dollar which continues to serve as a safe haven asset of last resort. The U.S. Dollar Index has just breached the psychologically important 100 level.
However, the U.S. dollar is not the only beneficiary of the risk-off mode in the markets – gold is gaining ground as well. Interestingly, silver is also acting as a safe haven asset despite its important role in industrial production which will clearly get hit during the current crisis.
At this point, it looks like market participants were searching for assets other than the U.S. dollar to buy them in case the Initial Jobless Claims data was worse than expected, and turned their attention to both gold and silver.
Other major precious metals like platinum or palladium did not show positive reaction to the bad unemployment data, so currently investment demand is limited to gold and silver.
Silver has rebounded from the major support level near $14.00 and is currently trying to get closer to the 20 EMA at $14.60. This is a key resistance level for silver.
Silver has tried to breach it several times, but each attempt was met by increased selling activity. It is highly likely that those who wanted to short silver accumulated their positions in the $14.30 – $14.70 area and plan to get out of them in case silver can get above $14.70.
Thus, the breach of this resistance level can lead to a material upside for silver. In this scenario, silver could head towards the 50 EMA, which is located near the $16.00 level.
On the support side, the $13.80 – $14.00 area continues to serve as a major level for silver. In case this level is breached to the downside, silver could quickly get to the next support level at $13.30.