Silver has fallen significantly during the course of the trading session on Friday, as it looks like the rally in silver is dead. The fact that we have broken below the 200-Day EMA will continue to cause downward pressure, and it’s also worth noting that we have broken through a significant area of support multiple times now. With that being the case, I think silver has a lot to do to prove itself, and if interest rates continue to climb, which they could do to the fact that the jobs number was so hot, silver is going to take it on the chin.
With that being said, I think now it’s almost impossible to buy this market as the precious metals markets in general are suffering. We ran far too quickly to the upside, but turning around and showing a significant amount of downward pressure at the $26 region. Ultimately, I think this is a scenario where we could very well end up falling all the way back down to the previous support level, which is closer to the $21 region.
Silver is dead money, and the biggest problem is that silver tends to be noisier than most other commodity markets. Beyond that, it’s also very expensive to trade in the futures markets, and therefore I think it’s a situation where traders will continue to be cautious, and it looks like at this point in time they are even starting to pile on to the downside.
Now that we are below the 200-Day EMA, I think that a lot of technical traders will get involved, and at this point I think if you are going to get involved with metals, you are better off getting involved in the gold market as it isn’t anywhere near as volatile as this contract. Silver is highly sensitive to interest rates, the US dollar, and quite frankly also very sensitive to industrial demand, which makes it a bit different than the gold markets, and therefore you need to be very cautious with the silver market, therefore it’s a situation where caution is going to be the most important thing that you can practice at this point.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.