Silver Technical Analysis
Silver is somewhat choppy and tight during early trading here on Monday as we are trying to figure out what to do next. Quite frankly, one of the biggest drivers of the silver market currently is interest rates.
Interest rates in America are elevated, although they have drifted a little bit lower in the early part of the session. Silver finds itself hanging around both the 50- and 200-day EMA indicators, which are both flat, thereby suggesting that there isn’t much in the way of momentum.
Big support sitting below
The $60 level below is a significant support level. The $70 level above is a significant ceiling, and we’ve just been bouncing around in this general vicinity since June. Ultimately, we will have to make a bigger decision, but with the massive amount of energy inflation that we have currently, it’s difficult for silver to really take off.
Interest rates work against the value of silver because, quite frankly, it’s easier to buy paper than it is to store silver. That is the general correlation. Higher interest rates don’t typically do a lot for metals, although it should also be said that it depends on why.
The fact that it’s energy inflation makes it a little bit unique, in the sense that the U.S. dollar isn’t the sole culprit. A lot of times, silver is very sensitive to the rise and fall of the U.S. dollar, but right now, this is more about rates and the fact that there is an attractive yield on the 10-year yield, 2-year yield, etc. Choppy trading has been the norm, but I don’t see signs of that changing just yet.
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